A Healthy Psychological Profile is Needed for Successful Trading

Jay's Market outlook for 25th September, 2006 : European markets fell heavily on Friday, while US stocks got away with a small fall. Asian markets are mixed this morning, with the Hang Seng up and the Nikkei down. The global short-term trend remains is mixed now. We too may see two-way moves today, with the indices not changing much. The levels below which a downtrend would be triggered have now moved up to 11,834 for the sensex, 3,420 for the Nifty.

A Healthy Psychological Profile is Needed for Successful Trading
By Van Tharp

Excerpted from Van Tharp's Peak Performance Home Study Course

Many mental health professionals define an "uncertain" condition as being stressful. Uncertainty occurs because of too much information or because of too little capacity. The very fact that we cannot deal with available information is stressful.

Available trading information far exceeds one’s capacity for making basic trading decisions, so one can only attend to some of this data. Limited capacity is a major factor in trading success and in understanding stress.

Three factors are essential to successful trading:
a healthy psychological profile,

the ability to make accurate decisions from a large amount of information, and

money management and discipline.

A weakness in any of these areas reduces one’s capacity for processing information, resulting in stress, poor trading decisions, and losses. Losses, in turn, can produce stress, resulting in more losses. Readers who have taken the Investment Psychology Inventory Profile™ may recall that their test results were split into these three major areas.

A Healthy Psychological Profile

A healthy psychological profile might easily encompass all aspects of trading. However, certain psychological characteristics appear distinct from decision making and money management.
Everyone has a different set of past experiences. As a result of those experiences, one develops certain attitudes toward life. These attitudes may be open or restrictive. Open attitudes produce growth, encompass change readily, orient people toward self-improvement, and produce happiness and success.

The successful trader, for example, might describe himself as follows:

I enjoy life to the fullest. I am constantly exploring new ideas, visiting new places, experiencing change, and having fun. I try to get everything I can out of life, and I eagerly look forward to each day.

I am in the best of health because I eat proper foods, get plenty of exercise, and sleep well. I am never overly stressed because I do not feel pressure—only challenge.


Although an open attitude is not essential to trading success, most successful traders are quite open. An open attitude will help a trader in the market because it enhances information processing capacity. Although the successful trader still has a limited capacity, his attitudes toward life keep his capacity at the highest possible level.

The losing trader, by contrast, often has a closed attitude toward life. Part of this closed attitude includes a number of defense mechanisms against winning, such as the fear of success or the fear of failure. Any form of defensiveness results in isolation, building protective walls, and resisting change.
Consider the following statements that a losing trader might use to describe himself:

I am really unlucky. Every time I try to trade, something goes wrong. I end up losing. Other people make it impossible for little guys like me to be a winner. Perhaps that is why I am so depressed all the time. Money sure has been my downfall.

Trading is very stressful to me, perhaps because I worry about what will happen all the time. But I also worry about what will happen if I get out of the markets. I’ll probably never be able to get ahead in life.

The losing trader has closed himself off from the world. Some information still gets through, but it is all darkly colored by his restrictive attitude. His closed mind severely restricts his capacity for dealing with information, and he feels "stressed."

About the Author: Trading Coach Dr. Van K Tharp, is widely recognized for his best-selling book Trade Your Way to Financial Freedom and his classic Peak Performance Home Study Course for traders and investors. Visit him at www.iitm.com

Education : By Azim Premji

Jay's Market outlook for 12th September, 2006 : European markets had a moderate decline last night, while US stocks finished marginally higher. The Hang Seng and the Nikkei are up this morning, and the global short-term trend may be turning up again. There is a therefore a reasonable chance that our stocks may recover somewhat today.

The following article is not related to trading or SAP (For a change). This is a editorial by Azim Premji, for Economics Times dated 5th Sept, 2006. He was Guest Editor for this issue.

EDUCATION : By Azim Premji

“This was my editorial comment for the Economic Times dated 5 Sept 2006, which I edited. I think this thought is relevant not just for India but for most developing countries, and in some senses for developed ones as well.”


In 1950, India resolved to secure Justice, Liberty and Equality for all its citizens, and enshrined these ideals in the Constitution. Fifty-six years later, equality of opportunity and socio-economic justice still seem a distant dream. What will it take for our nation to realise these noble goals? In the answer to this question lies the significance of Education.


Schools facilitate social continuity by enriching our children with our history, our collective knowledge and cultures. But the classroom is also the nation’s laboratory, where we create the kind of society we aspire to live in. Seen through this lens, schools become an important tool for humanity in its quest for higher truths, and for society in its endeavour to continuously rediscover and transform itself.


Schools can be truly visionary, creating an environment wherein children can engage in the quest for knowledge, with equity, participation, social awareness and self-initiative. Schools can empower children to become informed and self-reliant adults who can engage with societal, economic, cultural realities and possibilities responsibly and meaningfully. Schools can imbue our children with the spirit of inquiry and reform, essential to the creation of enlightened leaders that can transform India into the just, humane and equitable society that we aspire to.

But the ground reality, a far cry from this, is truly disturbing. Autocratic classrooms, mechanical rote learning, negligible intrinsic motivation, uninspired and uninspiring teaching, learning divorced from reality, characterise, with few exceptions, the vast majority of our schools, urban or rural, private or government, elite or impoverished. If today’s schools mirror tomorrow’s society, we need to be alarmed.



At the same time, there are some promising signs. Voices and actions once limited to individuals and buried in backyards seem to be coming together. The number of organisations involved in efforts to improve schools, often in partnership with state governments, is increasing. Social activism in Education is gathering momentum. Critical issues such as Common Schooling and the Right to Education Bill are being discussed in the public domain. Parents, irrespective of their socio-economic condition, are realising the importance of Education. They are exercising choice, and propelling change by moving their children from dysfunctional schools to ones they see as more responsive to their needs. And reassuringly, a few shining schools continue to show us the right path, despite all odds.



India is on a historic threshold of significant growth, and predictions of our rise as global economic powerhouse abound. Let us be aware, however, that this is not assured, not inevitable. It is the choices we make as a nation today, particularly in the field of Education, that will determine if this forecast finds fruition, and if the enormous opportunity this could open up for the country, will be steered for the greater good of all. The final measure of a nation’s development rests in the well-being of its masses. In India, this represents a large population with minimal social, economic and political choices. Education offers the one possibility of lifting our country from its mire of poverty and inequity, to enable the creation of a society rich in diversity, harmony and opportunity for human potential. As a nation, let us rise above all boundaries, and invest in our ideals and in our future, a future worthy of our past.


Azim Premji

Some more Thought's from Top traders.

Jay's Market outlook for 6th September, 2006 : European markets finished with a moderate loss last night, while US stocks made small gains. Asian markets are down this morning, and the global short-term trend is down now. This may result in a decline here as well, today.






think the leading cause of financial disablement is the belief that you can rely on the experts to help you. Investing requires an intense personal involvement.
-Michael Marcus

Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he’s not going to take a patient’s temperature.
-Bruce Kovner

In a bear market, you have to use sharp countertrend rallies to sell.
-Bruce Kovner

Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose.
-Bruce Kovner

The most important rule of investing is to play great defense, not great offense. Every day I assume every position I have is wrong. Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead. Always maintain your sense of confidence, but keep it in check.
-Paul Tudor Jones

You need discipline, patience, and courage. You must have a willingness to lose, but a strong desire to win.
-Gary Biefeldt

Investing is like poker. You should only play the good hands, and drop out of the poor hands, forfeiting the ante.
-Gary Biefeldt

Fundamentals that you read about are typically useless as the market has already discounted the price.
-I call them "funny-mentals." However, if you catch on early, before others believe, then you might have valuable "surprise-a-mentals"”
-Ed Seykota