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Title: How to Use Risk to Become a More Successful Leader by Van K. Tharp ISBN: 0-935219-00-5 Publisher: Intl. Inst. of Trading Mastery (IITM) Pub. Date: March, 1995 Format: Paperback List Price(USD): $125.00 |
Average Customer Rating: 4.33 (3 reviews)
Rating: 3
Summary: Good - 3 out of 5 (5 = excellent)
Comment: The endnotes are incorrectly numbered. Proof reading and editing needed. Cover quality is excellent. Printing quality of pages is terrible to reasonable. For USD125.00 one would have expected a top-printing job. The illustrations and the editing are also terrible to reasonable. A professional illustrator wasn't contracted. Also, the editor was on vacation ... this is what happens when people plan to maximize an investment ... This comment applies to all 5 volumes).
Mark Douglas's work on beliefs ("The Disciplined Trader" book and "The Path to Consistency" workshop) is much more ambitious and is a remarkable achievement. If I hadn't read and studied Mark's work I would have not understood some of the issues fully.
The Tasks of Top Trading is a very nice breakdown of the evaluation-decision making process. Very nice indeed! The "Loss Trap" presentation is awesome but again if I hadn't studied Mark Douglas's work I would have understood some of these issues fully. I do believe you need to know the mechanics of belief systems in a comprehensive manner.
The Risk Measurement Techniques (The Standard Deviation, the probability of success within 95% confidence bands, the calibration technique, the Trading Salary and Overhead): there is a catch 22 question here. The first year in trading (provided the trader employs a decent mechanical trading plan) is an year of discovery. There are quite a few questions and measures that 1) he will discover with time and 2) time itself will establish new criteria and measurements. You cannot apply the Trading Salary during the first year of trading. It will not work. Instead he should concentrate on himself more than ever and even employ a coach and talk to him every week. Also the coach should have a program, a plan to monitor his client. THIS IS VERY IMPORTANT and will the difference between success and failure during the first year!
The section on Risk Control and Money Management Techniques includes the stop loss bit, which is ok, but nothing extraordinary. The bit on profit taking is scary. Tharp advocates waiting for the "big pull":
1)Bear markets are a lot easier to cash in because they move very fast and certainly faster than bull markets;
2)Studies have been made (John Hill) which show that if you keep an eye on the direction of say the daily or the weekly and always only trade in that direction say via the hourly chart you will make more than the price range of the upper time frame; (you can add a few exceptions to improve results, such as "special" counter-trend rallies or declines)
3)If everyone is looking at the daily and weekly why not look at the monthly or at an intra-week chart and a sub-multiple thereof?; (Cynthia Kase provides all necessary ingredients in her book "Trading with the Odds")
4)I myself did a study on the US T-bonds and came to the conclusion that if I was to use the daily chart as trend director and the hourly chart as trade activator to trade in the direction of the first I would have made more than 3 times the range of the daily!
Then this: in page 135 he talks about a trader "involved in almost constant activity in the market". He ends the paragraph saying: "Don't try to make profits scalping, just consistent profits. But plan to position trade those large special moves in the market, because that is where you will make big money". The footnote adds: "This recommendation does not necessarily apply to all traders, but it certainly applies to most traders. If you are an exception, then you probably have something very special going for you."
It was my own trading and research that proved the contrary. The kind of market and the market I trade is one of the top 3 markets in the world (US T-Bonds) in terms of liquidity daily, weekly and monthly! I use an intra-week chart for trend direction a sub-multiple of it for trade activation. If I were to trade the director chart alone I would make say 100. By doing this all week long and accepting to engage every time I get a signal (almost daily) I manage to multiply that 100 value by as much as 4 every month. So the point of having to trade the "long pull" doesn't work. I can make more and make more than the average reaction or trend following systems.
I like the suggestions to minimize risk although there is quite a little bit that needs to be added to. But that's a different story ...
The Tape - Tharp has a terrible voice. The mastering wasn't done with good equipment. The microphone is not a top of the range voice microphone ("AKG tube" or similar). The dub is really poor. The hypnotic session shows that Tharp is a poor hypnotist. He lacks the skill. Read Tebbetts and Elman, then listen to Gil Boyne, Ormond McGill or Robert Krausz. It shows! So you need to spend more money to have your own tapes made... (Should cost about USD500.00 to have a superb set of tapes custom made which you can use for 6 months, then pay again cos' you change ...)
CONCLUSION: What's the value in this volume? There is a bit of value. He explains the mechanics of several processes, the traps, and the dynamics but in a superficial manner. Again, you should read and study Mark Douglas beforehand. It will give you a perspective, the perspective that Tharp lacks. Human perspective that is. The whole volume is cold, distant, tries to be objective but in reality the subject matter is so subjective that Mark Douglas managed to do a much better job! This is the first volume in a series of 5. I have studied volume 2 - Stress, and have found it to be far better than Vol 1. Let's hope the remainder 3 volumes are also better. Oh the paper quality is terrible too!
Rating: 5
Summary: Superb First Book to an Excellent Five Book Program
Comment: As a self-taught professional trader I am intimately familiar with this text. In fact, I would call it the first book of a New Testament for stock and commodity traders. It was the very first book on trading I read that brought an element of reason and common sense to the subject. That's because it was the first book that truly brought me face-to-face with the real challenge in achieving success as a trader -- self-mastery and personal understanding. This book contains several classic concepts including a detailed discussion of both "The Loss Trap" and "The Ten Tasks of Trading" Throughout it Dr. Tharp drives home the point that the real problem people have with trading is usually looking back at them in the mirror every morning. But instead of claiming that only a chosen few have the psychological and intellectual gifts necessary for trading success, he inspires the reader to commit himself to the self-awareness and personal excellence required to become a top trader. In the subsequent books to this series he lays out step-by-step a program that will turn any committed individual into a potential market wizard. I most enthusiastically recommend all the books in this series!
Rating: 5
Summary: Risk control is the secret to all successful trading
Comment: It took me a long time to get this concept. Van's book really helped. It wasn't something I really thought about until I read this book. My PNL volatility is much lower becasue of it. I highly recommend it
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