One of my primary roles as president of the International Institute of Trading Mastery, Inc. is to be a coach to some of the best traders and investors in the world.  And, just like any coach, I focus on making sure that the people I am working with are following the fundamentals.

In 2008, we are starting the second major downleg (in my opinion) of a huge secular bear market.  Real inflation is running over 12% (16% if you use M3, the total growth of money in the country); the U.S. dollar is declining in value; the Federal Reserve commissioned a report that says the U.S. is bankrupt, and we have a monstrous credit crisis in our midst.  However, crisis can also mean opportunity. But these are very difficult markets, as are most bear markets, and you must be able to follow the fundamentals of your craft.

With peak performance trading in mind, I decided to develop a quick 15-point questionnaire for you to evaluate yourself.  Take it yourself and pass it on to your friends. I’m sure you’ll all get some insights about your performance.

Answer each question with a true or false answer.

1) I have a written a business plan to guide my trading/investing.	____
2) I have read Safe Strategies for Financial Freedom, the 2nd Edition of Trade Your Way to Financial Freedom and I keep up with Tharp’s Thought.  As a result, I think I understand the big picture.  (A true answer doesn’t necessarily mean you agree with my viewpoint on the big picture.)	____
3) I am totally responsible for my trading results, and, as a result, I can continually correct my mistakes.  (If part 2 is false, all of this is false)	____
4) I can honestly say that I do a good job of letting my profits run and cutting my losses short	____
5) I have at least three trading strategies that I can use that fit the big picture.	____
6) For trading strategy one, I have collected an R-multiple distribution of at least 50 trades (i.e., from historical data or live trading).	____
7) For trading strategy two, I have collected an R-multiple distribution of at least 50 trades (i.e., from historical data or live trading).	____
8) For trading strategy three, I have collected an R-multiple distribution of at least 50 trades (i.e., from historical data or live trading).	____
9) For each of my trading strategies, I know the expectancy and the standard deviation of the distribution.	____
10) I know how each system will perform in each of the following types of markets: up-quiet, up-volatile, sideways-quiet, sideways-volatile, down-quiet, and down- volatile.	____
11) I have clear objectives for my trading.  I know what I can tolerate in terms of drawdowns, and I know what I want to achieve this year.	____
12) Based upon my objectives, I have a clear position-sizing strategy to meet those objectives.	____
13) I totally understand that I am the most important factor in my trading, and I do more work on myself than any other aspect of my trading/investing.	____
14) I totally understand my psychological issues, and I work on them regularly.	____
15) I would consider myself to be very disciplined as a trader /investor.	____
16) I do the ten tasks of trading on a regular basis.  If yes, on the average, how many days per week do you do it?  Give one point per day. This one can count up to five points because it is so important.	____

Okay, now give yourself one point for each true answer.  And be honest with yourself. Since question 16 counts up to five points, your total score can be as high as 20.

Fill in your score here: _______.

Now let’s take a look at how you rate.

15 or more. You have the makings of a great trader/investor, and you probably are doing very well in the market, even this market.

12 –14.  You have a lot of potential, but you are probably making some major mistakes and for many of you, these may be psychological mistakes.

9 – 11.  You are way above average, but you haven’t graduated to the big leagues yet.  You are like a high school football star, trying to move to the NFL.

6 – 8.  You are better than the average investor on the street, but you have a long way to go to hone your skills.  You probably need to really work on yourself, on your discipline, and on your trading strategies. 

5 or less.  You represent the average trader/investor.  You probably want someone to tell you exactly what to do and then you expect to make big profits based on the recommendation.  And when it doesn’t happen, you look for a better advisor or guru to help you.  Guess what?  … it doesn’t work that way.  But, if you at least answered true to question 12, then you have some potential and, if you are willing to commit yourself to excellence, you could move to the top of the scale in a few years.

Suggestions for Study

I'm not trying to give you a sales pitch here. But for those who will want to know... If you need help with business planning, I recommend the Business Planning CD Series.

If you need help understanding why you are the most important factor in your trading, then I recommend the Peak Performance material, either the home study course or the workshop.  If you haven’t done this course yet, I strongly recommend that you do it now.  Stop trading and do the course, especially if you are not making money trading. (And it's ok to start with either the home study or the workshop that is just around the corner).

If you don’t understand strategies and expectancy, then I recommend that you do the Systems Home Study Course.

And again, I'm not trying to give you a sales pitch. I just have the utmost confidence that these tools will help you like I've seen them help so many other traders over the years. 

 

Until next week, this is Van Tharp.