Trading Our Beliefs – Part 2

By Dr. Van Tharp

“You do not trade the markets. You can only trade your beliefs about the market.”
Van Tharp

The Psychology of Trading
In the previous articles we discussed various beliefs, mental states and mental strategies. Once you have a clear understanding of which beliefs, mental states and mental strategies are the core factors in top trading performance, you can then teach the same skills to others and have them perform well too. And when you can see this success duplicated in others, which we have been able to do in most aspects of trading, then you know you have a workable model.

The Key Psychological Traits of Top Traders are:

  1. Personal Responsibility
  2. Commitment
  3. Their psychological “profile”
  4. Working on personal issues (e.g., self sabotage)

Trading fundamentals include the Ten Tasks of Trading:

  1. Self Analysis
  2. Mental Rehearsal
  3. Low-Risk Idea Development
  4. Stalking
  5. Action
  6. Monitoring
  7. Abort
  8. Take Profits
  9. Daily Debriefing
  10. Periodic Review

Traders need to be reminded of these tasks and to eliminate any self-sabotage that keeps them from following the tasks. Van teaches all of these steps in detail in his various products and workshops. Van Tharp believes that everything revolves around your beliefs, mental states and mental strategies.

So with that in mind, everything about trading is 100% psychological, including why and how you trade or which system you will follow or build. Many traders have a hard time “believing” this and it is almost the antithesis of what people learn in academic finance.

So only you can decide whether it is worth the time to learn more about yourself and the psychological aspects of trading.

If you would like to learn more (this is one of Dr Tharp’s specialties), then we can certainly guide you in the right direction. You just might be surprised at the results!

“People get exactly what they want out of the markets. Most people are afraid of success or failure. As a result, they tend to resist change and continue to follow their natural biases and lose in the markets. When you get rid of the fear, you tend to get rid of the biases” ~ Dr. Van Tharp

Dr. Van Tharp


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