Q: Over the years, I’ve spent a lot of money searching for a plan on how to make money consistently in the market, and for the first time I believe Dr. Tharp’s book Super Trader has outlined a great blueprint on how to accomplish that. With that that being said, does Dr. Tharp have a system testing program he would recommend? 

I’m trying to start off small and keep it simple. I’m treating this like a business, and I’m willing to spend some money, but I don’t want to blow a bunch of money until I proven to myself that I can do this.   

A: As a general rule, we don’t make recommendations on software.  There are a number of packages that you could use to test systems. First, however, there are some more relevant questions to answer:

  • Why are you testing systems?  What do you need to see or prove to yourself?
  • Do you already have a business plan or even a trading plan?
  • Have you done the basic psychological groundwork to be ready to trade?

Just for reference, Van has his Super Traders spent 6 to 18 months on psychological work before they get to their business plan, which is before they get to their systems development.  We strongly recommend that traders start out with the psychological work, then move to planning and finally to systems development.  With this sequence, traders in systems development mode have a much better idea of what kind of general approach they will use in their systems, which particular markets they will trade, and which systems will fit which market types.  That may seem like a lot to consider—and it is. 

It’s quite common for us to hear from traders who start out on the technical side of trading, spend a lot of time, effort, and dollars on system development only to find out they still aren’t making money and can’t figure out why.  There are a host of reasons why this may be but here are a few of the main ones:

  1. They have unresolved psychological issues—of which they may or may not be conscious.  (We are talking about people who are very normal and typically successful in many respects, not psychopaths.  Trading involves a lot more “psychology” than most other fields.)
  2. They have not thought through a plan on why or how they will trade.
  3. They have trading systems that do not fit them.

If you want to trade successfully, which to me means being consistently profitable regardless of market conditions, then I would urge you to start with the Peak Performance Home Study Course.  We regularly hear from people who express their gratitude for the course and the difference it has made for their trading or for their life.  Their “love letters” are one of the most motivating aspects of working here. 

If you prefer to pass on that groundwork, then I would recommend Van’s Definitive Guide to Position Sizing. Van wrote, with the help of contributors, a chapter on various software systems for position sizing and back testing systems.  You might also read Trade Your Way to Financial Freedom, which has a good amount of systems information in it. 

Good luck and feel free to write back or call if you have more questions.  —R.J.