Dr Van Tharp is a professional coach for trader and investors, using his expertise in psychology and NLP to create models of trading and investing upon which so much of his work is based.

He is the author of a number of popular trading books, including Trading Beyond the Matrix: The Red Pill For Traders, Super Trader, Trade Your Way to Financial Freedom, Safe Strategies for Financial Freedom, Financial Freedom Through Electronic Day Trading, The Definitive Guide to Position Sizing and a number of courses offered by the Van Tharp Institute.

Tharp is the only trading coach featured in Jack Schwager’s best-selling book, The Market Wizard’s: Interviews with Great Traders and has been featured in Forbes, Barron’s Market Week, Technical Analysis of Stocks and Commodities, Investors Business Daily and Futures and Options World, and Trader’s Journal, just to name a few.

Dr. Tharp is also a highly rated guest speaker at expositions and conferences, conducting workshops around the world, including for floor traders and portfolio and hedge fund managers worldwide.

In this episode we talk about beliefs and their impact on trading, the qualities of successful traders, adapting trading to market types, position sizing, trading mistakes and overcoming fear, perfectionism and impatience.

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People don’t assume responsibility for their trades

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Topics discussed

How Van got started in the markets and the issues he faced initially
The main reasons the majority of trades are unsuccessful
How traders can identify the type of strategies that suits them
What it means to trade your beliefs in the market
How to assess whether your beliefs are useful or limiting
The real importance of psychology in trading
Your collection of parts and how they interact
The process of transformation in a trader
Qualities of losing traders and how to test yourself for them
The impact mistakes could be having on your results without even knowing
How to cope with larger trade sizes as your account grows

PLUS listener questions on:

Using position sizing to meet your objectives
The 6 market types, how to measure them and how to apply it to your trading
How to find positive expectancy systems
Developing patience when in a trade
Trading in short timeframes
How to address issues with perfectionism
Systematic vs Discretionary trading
Overcoming fear of pulling the trigger
Handling drawdowns

Resources mentioned in this episode

Van can be contacted through his website
The Tharp Trader Test is available here
Books:

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Quotes

You don’t trade the markets you trade your beliefs in the market

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Most people find about 75% of their beliefs are not useful

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Losing traders don’t realise they are the contributing factor in their trading

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Most traders don’t even recognise their mistakes

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If you don’t have any rules you may as well forget about trading

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Quite often the biggest drawdown happens when the market type changes

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Top tips from this episode

Here are few of my favourite takeaways from the chat with Van:

The impact of beliefs on trading – one of the statistics Van mentioned was “Most people find about 75% of their beliefs are not useful”. I found it surprising the number was so high, which made me think about my own beliefs and how they could be impacting me, not just in trading but also in life. It’s a really interesting exercise.
Market types – I also enjoyed his insights into market types, measuring trend strength, direction and volatility to classify the type of market and then developing strategies for each market type. I really liked his quote “Quite often the biggest drawdown happens when the market type changes”. If you really understand the best market types for your strategies you can switch between them as market conditions change.