Van Tharp focused on trading psychology. He studied trader performance from the 1980s until his death in 2022. He attempted to get traders to realize their full potential by removing blocks and mental obstacles that were affecting/hurting their trading. 

Following Van’s death, the Van Tharp Institute, which provided his trading courses/workshops, shut down. The workshops are no longer available, but the teachings they provided live on. You can find some of my favorite insights from one of his workshops below. Residual or used copies of Van’s books can still be found online or in used bookstores. You may even be able to find old copies of the workshops, as they are no longer being sold by Van Tharp’s organization.

The Peak Performance 101 workshop offered tools to start eliminating mental blocks that may be preventing a trader from realizing their full potential. 

I took the course in May 2020.

The live workshop, which was conducted online (not in person) due to COVID-19, ran for five sessions which were about five hours each. There was a segment dedicated to the theory and then quite a bit of time where we got to practice the skills in a small group. 

As of 2024, I still use the material I learned in this course.

My Favorite Insights and Exercises

There were many great insights and exercises in Peak Performance 101. I’ve summarized a few of my favorites below. Some of the techniques that Van Tharp taught were proprietary, so I’ve provided my experience and interpretation, and my experience or interpretation may be different than their intention or teachings. 

Finding Conflicting Beliefs

A useful tidbit from early in the course is looking at a problem and then trying to root out what belief underlies that problem. There is probably a belief conflict. For example, someone may want to hold a trade for a big profit, but they may have a belief of scarcity such as “Money doesn’t grow on trees!”, or “The price will never go up that much while I’m in a trade.”

If thoughts like that are flashing through our minds during a trade it will certainly cause a problem, even if we attempt to reign those thoughts in. We will find an excuse to take profit well before our big profit is achieved, likely as soon as the price pulls back a bit (which prices constantly do) because we’re afraid to give up the money we’ve already made…because money is hard to come by in our opinion (if we hold those beliefs).

Data and sound strategy testing can help alleviate the firmness of these beliefs that don’t serve us, but they should also be replaced with other more beneficial beliefs.

That belief could be “Markets make big price moves and I know how to be a part of them” (my words, not Van’s) for example. This is probably a more beneficial belief for making money than “Money doesn’t grow on trees.”

The course provides specific steps to help integrate such beliefs. The basic idea is that the new beneficial belief is rolled around in the mind until it is understood. We add in supporting thoughts and data to help clarify it in our mind. We ask ourselves if we’re willing to understand this. Then we move on to saying I believe this to be true. 

We see how we feel and if we’re hitting any resistance with accepting this belief. Feel into the resistance, where it is coming from?

Ask if you would like to believe this, and how it will serve you.

Then it goes beyond belief once there is no resistance, and it becomes a decision. This IS my belief. I AM this person.

Then project forward in time and imagine holding this belief, firmly in the future. How would that affect trading today? How would it affect performance this week or this year? If you believe this all the time, how does that change your life? Focus on emotions that come.

Go through this process quickly any time the old negative beliefs pop up. Reinforce the new belief to make it stick.

Enhanced Daily Routine

A routine can make you more efficient in life, and it can definitely help your trading.

My routine includes reading through a brief document that covers my strategies and what I need to pay attention to every morning before my computer is turned on. It helps reinforce that I only take trades in that plan, and what those trades look like. I also have a bunch of charts printed off with what “good” trades look like for my strategies. I look through those examples before making trades. This makes sure I am only looking for trades of similar quality.

Have a mental rehearsal before the start of the day. Imagine typical trades and executing them perfectly, especially imagine scenarios that could go wrong, and rehearse what will be done based on the strategy. 

Essentially, rehearse what you will do in uncomfortable situations, such as the price moves against you, the price moves in your favor and then against you, or the price doesn’t move much after entry.

Know what you will do, so that you have a plan and are less likely to make a mistake when put in an uncomfortable position. Plan for the discomfort.

You may also want to have a pre-trade checklist by your computer, and refer to it before each trade (if time permits; it may not be suitable for day trading).

I have a few examples of trading routines outlined here.

Also check out 4 Practices to Drastically Improve Your Day Trading Results, as it also discusses some things to focus on every day and to include in a routine.

Dissociation Exercise

If you’re struggling with emotion while trading—such as being scared to enter a trade, anger/revenge, or not wanting to take a loss at the pre-determined exit point—try dissociation.

Instead of sitting there inside your own skin freaking out, physically step out of your chair and look at it. While standing, looking at your chair, imagine yourself, or a great trader, handling the situation calmly and according to the outlined trading plan. If you respect a specific trader, imagine them sitting in your chair. Would they be freaking out? How would they handle this?

Physically try it. Actually, get up and look at your chair when your emotions are starting to rise while trading. 

“See” and imagine yourself acting correctly. It will likely provide enough relief and clarity to avoid doing something stupid (outside the plan). Go back and sit in the chair, maintaining or recreating that calm mental state that you envisioned. Act accordingly.

Parts Negotiation from Peak Performance 101

I found the “parts negotiation” exercise very helpful.

We have lots of little voices that want to be heard. The perfectionist in us, the trader, the researcher, our mother/father/spouse’s voice, our friend’s voice, our future self, the part that wants to party, the part that wants rules, the part that wants freedom, the part that wants stability and safety, the part that wants tidiness and organization, the part that wants to break things, the part that wants to be respected, the part that wants to be fun and take risks…and the list goes on.

The goal is to work on one conflict at a time to improve our trading. Usually, there are one or two BIG conflicts, which, if handled, can really improve our trading.

I had a conflict between my trader who wants to make money and take every valid opportunity I can find, and my “holiday” guy who wants to hit the golf course every day at 10 am, and also wants to have vacations all the time or just relax and not look at a screen all day.

These two are always in conflict. On a nice day, I’m distracted because I want to get outside, but the trader says we need to make some money before spending it. This distraction can mean missed trades, or jumping into trades too early to try to make some money, because Holiday guy wants to get outside and is driving us (other parts) crazy. It also means some days I just don’t end up working. Some would say that is a nice problem to have, but it has a downside if it gets out of hand.

The exercise is to have the two parts have their voices heard. And most importantly, to state their positive intention for the whole person.

My trader wants to make money so that long-term we never even need to think about money.

Holiday guy wants us to enjoy life NOW, and not be so focused on material things.

In a way, they both want the same thing, but on different time frames.

So I had to negotiate between my two conflicting parts.

In my case, they need each other! Holiday guy needs Trader guy to pay for everything, and so he’s willing to work with him. Trader guy also realizes that life is worth living fully and that every day, all day, in front of a screen isn’t good for performance either. So Trader is willing to hand over the reins to Holiday guy once the important morning work is done.

My two parts agreed that I would limit my trading activities to a specific time of day, and at a specific time, that is it, I’m done. Then it is Holiday guy’s time to enjoy the day. Trader guy promised to let him enjoy it…IF Holiday guy doesn’t bug him while the important trading work is being done. 

Trader guy gets to make the money, without distraction (which will likely improve performance and happiness), and Holiday guy gets to enjoy the evenings and the money without Trader being grumpy because he can’t look at charts or run scans (these two parts can totally sabotage each other, so both need to be happy and agreeable with each other). Win-Win.

Essentially, they agreed to stay out of each other’s business, and give each other the mental driver’s seat during certain times of the day, week, and year.

It sounds kind of stupid to have a negotiation like that with one’s self, but it feels good…calming. I love being active and outside, but I also trade.

There is a tendency to just let one part take over and bombard the rest of the parts. “I AM TRADING TODAY!” and then we are miserable and distracted doing it, “OR I AM GOLFING TODAY!” and then no work gets done and maybe we feel guilt while out on the course. We end up sabotaging ourselves, our performance, and our happiness.

If another part wants something, have a brief negotiation with yourself. That way, the task being focused on can be focused on completely…which will likely result in better performance and a better, healthier state of mind.

Those parts have been at odds for 15 years…and both seem very settled right now. Their goals are aligned a routine has been created to help them both have their time so they don’t sabotage each other!

Holiday guy also gets a big holiday every year, pretty slack Fridays, and a road trip at least once a month…without Trader guy checking the phone/computer. Trader guy gets time to completely focus on the market each day during certain times, without distraction from Holiday guy.

Simple, but to me, that calmness and lack of inner conflict improves performance and also improves the quality of life in multiple ways.

Those were two parts I knew almost instantly were in conflict.

Any internal conflicts affecting your trading that jump to mind?

I have written a separate article about this topic called Why We Mess Up Trades and What to Do About It, and it includes a video explaining more of these concepts

A lot of people mentioned a perfectionist who prevents them from following a plan, or a mother/father/spouse voice in their head that disapproves of trading. Those voices aren’t going anywhere! Have a negotiation inside your mind with them.

Improving On Mistakes

A mistake is any time we don’t follow our trading plan.

If we don’t have a trading plan, every trade is a mistake.

One of the quickest ways to improve is to reduce the number of mistakes we make. This collects profit our strategy already owes us. No more learning is required. Just do better at what we already know.

Maybe you read a book and started using a strategy. The strategy dictates you can make 10% per month, but you have been losing about 3% per month while trading it (making lots of mistakes).

Assuming the strategy actually works, you can improve your performance by 13% per month just by correcting mistakes. You don’t need to learn anything else. Just giving some attention and focus to what you’re already doing will yield huge and beneficial results. 

How Much Are Your Trading Mistakes Costing You discusses tracking your mistakes and finding ways to improve on those mistakes.

Everyone should passively invest some funds. Set it and forget it for 10 years or more. The Passive Stock Investing Using ETFs eBook lays out the approach that has been compounding people’s wealth for the last 150 years.

By Cory Mitchell, CMT

Disclaimer: This was my experience of the course and some of the material presented. My interpretation of the material may not be how it was originally intended or I may have explained things wrong. My words are not meant to be a replacement for taking the course. These were just a few things I like about the course, and how I have implemented them.