Van K. Tharp came up with a terrific title for his latest book—Trading Beyond the Matrix: The Red Pill for Traders and Investors (Wiley, 2013). The reference, of course, is to the film The Matrix. “We live in a world of illusion shaped by our programming. And at some level, we seem to know that, and we seem to know that there is something better. At this point, you have a choice. You can take the blue pill and go back into a comfortable sleep where nothing changes. … Or you take the red pill and, as Morpheus says in the movie, ‘see how deep the rabbit hole goes.’” (pp. xxiv-xxv)
Tharp takes the reader down a pretty deep rabbit hole in this book. Although the first part of the book (“Transformation of the Trading Game: Understanding the Basics”) touches on his work on position sizing and risk:reward ratios, the book’s main thrust is personal transformation (“Psychological Transformations to Help You Function at a Superior Level within the Matrix” and “Moving Beyond the Matrix by Transforming Your Level of Consciousness”). He called on students to write eleven of the book’s eighteen chapters describing their own transformations, some more dramatic than others, in the wake of Tharp’s courses or personal mentoring. Tharp also describes his own “personal journey of miracles.”
The goal, Tharp claims, is to move from trading from “low levels of consciousness such as fear and greed” to “trading from higher states of consciousness such as acceptance, peace, and enlightenment.” That is, you should aspire to “observe what the market is doing right now with no interference of any kind.” (pp. 337-38) You should rid yourself of or transform 5,000 (!) major beliefs and stop the internal chatter in your head. You should increase your level of consciousness (and hence your happiness) “until you disappear.” Tharp, by the way, is now a Oneness trainer and offers a Oneness Awakening course through the Van Tharp Institute.
There is no doubt that psychological hang-ups can impede trading. Whether traders need a major consciousness transformation or just some brief therapy (think back to Brett Steenbarger’s work) remains an open question, however. Personally, I lean toward the latter, which means that I would have preferred a (not the) purple pill.