Summary of Van K. Tharp's Trade Your Way to Financial Freedom 2nd Edition

Everest Media

Description

Please note: This is a companion version & not the original book.
Sample Book Insights:
#1 The first part of the book is about selfdiscovery and moving yourself to a point where it's possible for you to do market research. You can't design a system that's right for you unless you know something about yourself.
#2 The secret to making big money in the market is buying breakouts that go beyond a normal day’s range of price movement. This is called volatility breakouts. You can make a bundle by following this advice.
#3 The fourth phase is when people start asking you how to do it. In this phase, they are looking for anything that will provide them with the secrets to unlocking the universe of untold riches. They go to lots of seminars and learn about various methods.
#4 The investor’s search for the Holy Grail is a search for the magic secrets of the market that will make them rich. However, these secrets exist where you would least expect them: in the midst of a spiritual path between pairs of opposites, such as profits and losses.

Sujets

• Efficacité professionnel
• Training

Informations

• Publié par: Everest Media LLC
• Date de parution: 01 avril 2022
• Nombre de lectures: 1
• EAN13: 9781669374664
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Insights on Van K. Tharp's Trade Your Way to Financial Freedom 2nd Edition
Contents Insights from Chapter 1 Insights from Chapter 2 Insights from Chapter 3 Insights from Chapter 4 Insights from Chapter 5
Insights from Chapter 1

#1

The first part of the book is about self-discovery and moving yourself to a point where it's possible for you to do market research. You can't design a system that's right for you unless you know something about yourself.

#2

The secret to making big money in the market is buying breakouts that go beyond a normal day’s range of price movement. This is called volatility breakouts. You can make a bundle by following this advice.

#3

The fourth phase is when people start asking you how to do it. In this phase, they are looking for anything that will provide them with the secrets to unlocking the universe of untold riches. They go to lots of seminars and learn about various methods.

#4

The investor’s search for the Holy Grail is a search for the magic secrets of the market that will make them rich. However, these secrets exist where you would least expect them: in the midst of a spiritual path between pairs of opposites, such as profits and losses.

#5

The secret of the Holy Grail is to find a trading system that fits you. If you haven’t found that place in yourself, it's very hard to accept losses. And if you cannot accept the negative consequences, you'll never succeed as a trader.

#6

Success in the markets comes from internal control. This is a radical change for most investors, who believe that markets create victims. But markets do not create victims; investors turn themselves into victims.

#7

Trading is 100 percent psychology, and to perform any behavior, you must process information through the brain. To duplicate any behavior, you must learn the ingredients of that behavior. That is where the science of modeling comes into play.

#8

The key to teaching the skill is to model it first. Over the last 20 years, the science of modeling has emerged almost as an underground movement. This movement comes out of a technology developed by Richard Bandler and John Grinder called neuro-linguistic programming.

#9

The third model is on how great traders determine their position size throughout a trade. Position sizing is the part of your system that determines how much you are going to risk on each trade. It answers the question how much. throughout the trade.

#10

The fourth model is on wealth. Financial freedom occurs when your passive income is greater than your monthly expenses. If you can generate enough income through trading or investing to meet your monthly expenses and the process requires only a few hours of your time each day, then I’m willing to call that income passive income.

#11

I have divided this book into three primary parts: self-discovery, judgmental heuristics, and setting personal objectives. I’ve deliberately made Part One a short section so that you won’t get too impatient with me. The reason I’ve put this self-discovery material first is because it is critical to your success in developing your system.

#12

The search for the Holy Grail system is an internal search. The first step in that search is to become aware of what might be holding you back. When you accept that you are in charge of your life, you can change.

#13

We generalize, delete, and distort the information we receive. We typically trade our beliefs about the market, and once we’ve made up our minds about those beliefs, we aren’t likely to change them.

#14

There are several biases that affect how you trade a system. For example, one man claimed that the book is full of controversy and that key elements were left out. However, those statements were just projections coming from him. There is no conflict within the material presented in this book.

#15

Before you can think about trading systems, you must first represent market information in such a way that your brain can cope with it. Most people think about market activity using bar charts, which summarize a day’s worth of data and include at most four pieces of information: the open, the close, the high, and the low.

#16

The law of representation states that people assume when something is assigned to represent something, it really is what it is supposed to represent. The bar chart in Figure 2. 1 and the candlestick chart in Figure 2. 2 only show you three things: the range of prices that occurred throughout the day, a little bit about how prices moved, and the Japanese candlesticks that make the overall movement clear.

#17

The scary thing is that a daily bar, which is at best summary information, is typically the raw data that you manipulate to make your decisions. People treat words like support level and resistance level as if they were real phenomena, when they are simply concepts that represent relationships that people have observed in the past.

#18

There are many more biases that can affect your trading, and they all need to be taken into account when developing a trading system or evaluating the validity of your signals.

#19

The assumption that our data are reliable is a bias related to the representation bias. It is common to assume that a day’s worth of data is represented by a daily bar chart, but many data vendors combine day and night data, so is it really a day’s worth of data.

#20

I trade a portfolio of 16 futures markets using a system of my design. I use portfolio trading system software to run my system code against daily data to generate orders each night. The basic entry and exit rules are programmed into a real-time software program, so that I am alerted when I have taken a position in a market.

#21

The lotto bias is the illusion of control that people get when they play the state-run lottery game called lotto. People think because they get to pick the numbers that their odds of success are somehow improved.

#22

People are always trying to figure out what to do right now. They buy software that gives them entry points, and brokers help them pick numbers. They believe that they have a trading system if they have an entry point that makes them money.

#23

The lotto bias is so powerful that people will often not get the information they need to succeed in the market. They will instead hear what they want to hear. This book is an exception to that rule.

#24

The law of small numbers says that it doesn’t take many cases for you to jump to a conclusion. For example, if you see a pattern like the one in Figure 2. 3, followed by a large move, you assume that the pattern is a good entry signal.

#25

The conservatism bias takes over when we have a trading concept in mind. We fail to recognize or even see contradictory evidence, as the human mind is quick to see the few outstanding examples of moves that work while ignoring examples that don’t work.

#26

The second bias affects trading system development is the assumption that market prices are random. However, this assumption is not correct. In reality, the market has characteristics of randomness, but that does not mean it is random.

#27

The need-to-understand bias enters into how most people develop trading systems. They completely ignore the randomness element. Most people don’t even consider position sizing as part of their system.

#28

The more indicators you add to your system, the better you can describe historical market prices. However, the more a system fits the data on which it was developed, the less likely it will be to produce profits in the future. Thus, only add 4 or 5 degrees of freedom to your system.

#29

When you are testing data, if your results seem too good to be true, they probably are. You probably got those results through postdictive errors.

#30

When designing a system, your goal should be to produce low-risk ideas. A low-risk idea is defined as a method with a long-term positive expectancy and a reward to risk ratio with which you can live.

#31

There are still more biases that can affect your trading, such as the desire for maximum performance, which can lead you to override your system. If you don't have a trading system, numerous biases affect your trading.

#32

The gambler’s fallacy is a natural consequence of the randomness bias. It is the belief that when a trend is established in a random sequence, the trend could change at any time. Thus, after four consecutive up days in the market, a down day is expected.

#33

The first rule of trading is to cut your losses short and let your profits run. Most people, however, have a bias that keeps them from following this rule.

#34

The human desire to make current positions work out can lead to problems. When you have a losing position, you'll do anything to nurse it along, hoping it will turn around. People take profits prematurely in order to make sure those profits remain profits.

#35

The amount of information we are exposed to doubles every year. We have developed a number of shortcuts or heuristics to help us cope with the vast amount of information. These heuristics are useful under most circumstances, but their implications for traders and investors are so strong that the average person has no chance of making money in the markets unless they deal with them.

#36

The market is a mechanism that determines the price of a good or service by sending a signal to everyone in the market. The market is constantly sending signals to everyone in the market, and these signals are what determine the price of a good or service.

#37

objectives are a critical part of any system. If you are going to develop a system for trading or investing in the market, decide what you want to accomplish first. Then, develop a system to accomplish those goals.

#38

The first part of the objectives exercise involves taking a self-invento