Trading Beyond the Matrix THE RED PILL FOR TRADERS AND INVESTORS WILEY John WUey & Sons, Inc.
Contents Acknowledgments Foreword DougBentley xvii xix Preface: Understanding Transformation Level I: Transformation of the Trading Game Level II: Understanding the Matrix and Reprogramming Yourself Level III: Trading Beyond the Matrix Your Personal Application of This Material xxiii xxv xxviii xxx xxxi SECTION I: TRANSFORMATION OF THE TRADING GAME: UNDERSTANDING THE BASICS Two Sets of Rules Chapter 1: I Just Made 130 Percent and That Was Just the Beginning David Witkin Learning to Trade "Danger, Will Robinson, Danger!" Tharp Think 101 Not All Lessons Are Equal Finally, Some Winning Marbles 9 10 12 16 20 vii
viil Contents Chapter 2: Chapter 3: Chapter 4: The Automation of Tharp Think 25 Laurens.Bensdorp My Journey into Doing the Trading Myself 27 Training Someone Else 32 Why This Is Possible 33 Addendum 35 From Commercial Loan Officer to Financially Free Trader Investor 37 Rick Freeman My Initial Psychological Changes What I've Learned about the Trading Game Understanding the Trading Game So How Do You Get a Positive Expectancy System? Getting a System That Works Trading Psychology How My Life Has Changed From Army Major to Systems Expert Kenneth Long, DM What I Have Learned and How I Have Changed The Power of Beliefs Statistics-Based Trading Trading Extremes Reward-to-Risk Assessments R-Multiples Position-Sizing Strategies and Bullets SQN Performance to Evaluate Systems, Targets, and Markets Market Classification Strategies Transformations Improved Systematic Performance Specific Systems for Specific Market Conditions Detailed Documentation and^analysis of Trades Evidence-Based Management Reduced Stress Performance Long-Term System with Monthly Rebalancing 40 44 46 50 51 52 54 59 61 61 64 67 68 69 70 71 72 73 73 74 74 74 75 75 76
Chapter 5: Chapter 6: Contents Weekly Swing Trade with Once-a-Week Portfolio Adjustments Pattern Swing Trade Using End-of-Day Data Live Trading Workshops Results Using Tharp Think to Go from Full-Time Broker to Full-Time Trader Martin Horsey My New Venture Going to North Carolina Restarting Trading Where I Am Now Adapting Tharp Think to Your Trading Area One: Thoroughly Understand the Principles of Successful Trading Part 1: Learning to Trade Is Hard Work, But It Can Be Taught Part 2: Knowing Yourself Part 3: Mistakes Part 4: Objectives and Position Sizing Strategies Part 5: Probability and Reward-to-Risk Assessment Part 6: Systems and Market Type Steps to Learning Tharp Think ix 77 78 79 83 84 85 87 90 93 95 97 98 100 101 103 107 109 SECTION II: PSYCHOLOGICAL TRANSFORMATIONS TO HELP YOU FUNCTION AT A SUPERIOR LEVEL WITHIN THE MATRIX 111 Chapter 7: Beliefs: The Basis for the Matrix Understanding the Impact of Beliefs Will Change Your Life How I Create My Experience 117 118 124
x Contents You Are the Awareness of Thoughts that Flow through You 129 Belief Hierarchy 130 Changing Your Beliefs 134 Everything Has the Meaning You Give It 139 Chapter 8: A Journey through the Stunning World of Feelings and Trapped Emotions 143 Anonymous The Turning Point - 144 Self-Sabotage Models 147 Accepting My Feelings 148 Where I Am Now 152 Note from Editor: Feeling Release as a Metric for Awakening 156 Chapter 9: You Are a Crowd of Conflicting Parts Inside 157 Exercise: Have a Parts Party Parts Negotiation Exercise Interview with a CBOE Floor Trader Working with Dr. Van Tharp Dealing with Conflicting Parts What's Changed Since Then Where I Am Now (Several Years Later) 160 160 163 165 166 168 169 Chapter 10: My Inner Guidance: A Personal Journey of Miracles My Personal Journey Conversations with God Deeksha or the Oneness Blessing My Relationship with Mitzi My Current Inner Guidance Revisiting the Transformed Engineering Professor My Relationship with Durga Grows Oneness with God 171 172 176 178 179 181 183 186 187
Contents xi Bond with the Divine 188 The Nature of the Relationship Is Critical 191 What Does this Mean for You and for Your Trading? 193 Some Recent Updates 197 Update 1: Mother Meera's Second Blessing 197 Update 2:I Clear My Fear-Based Spiritual Beliefs 198 Chapter 11: My Experiences Using Transformational Meditation 201 Peter Wechter "I" Have a Problem Using and Relating to the Word "God" 206 Five Transformations 207 Some More "Little i's" That Didn't Get the Message 210 Discussion 220 Dealing with Mistakes 221 Discussion 224 Closing Reflections 225 An Addendum 226 Chapter 12." Creating Your Own World 233 Nine Steps to Mastering Yourself 236 Step 1: Learn That You Are a Crowd Inside 236 Step 2: Get 25 to 30 Identity-Level Beliefs from Each Part 237 Step 3: Do a Belief Examination Paradigm on Each of Your Beliefs 239 Step 4: Learn about Projection and Your Shadow Self 240 Step 5: Work on the Charge through Feeling- Release Exercises 240 Step 6: Do a Life Review and List the Beliefs That Come Up 242 Step 7: Make a List of Your Problems and Find the Root Cause (Beliefs and Feelings) 242
xii Contents Step 8: Get in Touch with Your Internal Guidance 243 Step 9: Work to Eliminate Parts, or to at Least Get Them to Work Together with You 245 SECTION III: MOVING BEYOND THE MATRIX BY TRANSFORMING YOUR LEVEL OF CONSCIOUSNESS 247 Our Most Powerful Tool " 249 Super Trader Journeys through Transformation 250 Chapter 13: How I Turbocharged My Transformational Journey 253 Kim Andersson Discovering the Linchpin 258 Transformations Turbocharged! 262 Transformational Pillar #1: Getting Rid of Fear 262 Transformational Pillar #2: Tapping into a Higher Power 264 Transformational Pillar #3: My Purpose in Life 266 Transformational Pillar #4: Finally Getting Rid of My Need for Control 266 Taming My Unconscious Fear of Becoming a Millionaire 268 A Snapshot of Before and After 269 The Turbocharged Transformational Model 270 Conclusion 272 Chapter 14: From Engineer to Spiritual Warrior: A Trading Journey 273 Anonymous Timeline 1: Downhill Accelerating 274 Timeline 2: Crawling out of the Pit 278 A Message from Somewhere 279
Contents xiii Finding Out That I Would Be a Professional Investor as Soon as I Retire Do I Have a Real Problem, or Do I Just See Monsters in the Closet? Meeting Super Trader Program Students: I'll Have What They 're Having Transformation 1: Dropping the Pain of Past Projections Original Situation Actions to Achieve Transformation- Transformed State Interlude: There's Money for Everyone Transformation 2: Firsthand Experience of a Benign Universe Original Situation Actions to Achieve Transformation Transformed State Transformation 3: Realizing My Purpose Original Situation Actions to Achieve Transformation Transformed State Transformation 4: Finding a Vehicle That Suits Me Original Situation Actions to Achieve Transformation Transformed State Transformation 5: Become an Active Manager of Emotional States Original Situation Actions to Achieve Transformation Transformed State Bottom Line: Net Winner in Life 280 282 283 284 284 285 287 288 289 259 290 292 292 292 293 295 296 296 297 298 300 300 301 303 305 Chapter 15: A Professional Trader's Journey beyond the Matrix 307 Curtis Wee My Early Trading Experiences 310 Stumbling on the Van Tharp Institute 312
xiv Contents Key Lesson 1: Taking Personal Responsibility 314 Key Lesson 2: Able to Deal with Thoughts, Emotions, and Actions 315 Key Lesson 3: Knowing My Thoughts Are Not Mine Key Lesson 4: Trusting My Inner Guidance Key Lesson 5: Understanding That the World Is Perfect Key Lesson 6: Knowing My Purpose Key Lesson 7: Reinventing Myself So Where Am I Now? 317 318 318 320 322 322 Chapter 16: My Journey to Trading in the Now Thahn Nguyen My Transformation Journey Area 1: My Anxiety or Worry Area 2: My Impatience i Area 3: My Fear of Failure or Being Wrong Area 4: Being Overwhelmed Area 5: Tendency to Believe That I'm Always Right Area 6: Trading with No Plan or System How It Happened Where Am I Now? Editor's Note Chapter 17: Thoughts on Raising Your Level of Consciousness Some Exercises for Trading in the Now Trading in the Now Level IV Transformation Questions on Raising Your Level of Consciousness 325 327 328 330 330 330 331 331 333 334 336 337 338 340 342 344
Contents xv Chapter 18: Continuing the Journey 349 Area Three: Develop a Personal Business Handbook for Trading/Investing 349 Area Four: Assessing Your Preparation for Trading 355 Area Five: Understand Your Trading Mistakes 360 Appendix: Recommended Readings 363 Appendix: Key Words Defined 367 Appendix: Reference Notes 373 About the Author 381 A Personal Invitation from Dr.Van K.Tharp 383 Index 385