Your Beliefs Are Critical for Trading Success

In my last two articles for Your Trading Edge, we talked about two of the three ingredients of success: Mental States and Mental Strategies. You learned that even a simple strategy like executing a trade could get messed up and was basically psychological in nature. And, you learned that the state you trade from is most important.

In this issue, I want to talk about beliefs, the third ingredient necessary to model successful trading.

What Is a Belief?

Basically, any statement I make is a belief. And most beliefs are not necessarily true; but, rather true in some particular context. To illustrate the importance of context, let’s look at something that most of you think is probably true. If you jump off from a 100 meter building, you will make a mess on the pavement below and that will be your last jump. On this planet, that’s probably a useful belief to have. However, on another planet (such as the moon), you might easily survive a jump from a 100-meter building because there would be less gravity. In fact, in space, if you jumped off a 100-meter rocket ship, you might not even go down. Instead, you might go up into space. So, the context in which a belief is true is very important.

You experience what you believe, unless you believe you won’t, in which case you don’t, which means you did. Harry Palmer, Founder of Avatar

To illustrate the overall importance of beliefs, let’s look at one of my favorite quotes:

Your beliefs are actually your filter to your reality or your experience. Einstein was once asked about the most important question one could ask. His response was not what one might have expected. Instead, he said, “The most important question you could ask is, “Is the universe a friendly place?” If you think it is unfriendly, then you will constantly be building walls around yourself to keep out the danger. On the other hand, if you think it is friendly, then you will openly embrace everything.

The Belief Hierarchy

There is a hierarchy of beliefs as shown in the following diagram. The diagram is an inverted triangle with the most important beliefs on the bottom and the least important beliefs on the top.

At the top of the hierarchy, where there are the most beliefs, would come environmental beliefs. An example of an environmental belief might be that “markets sometimes form sideways bands.” This has little impact for most people. It’s just a statement about markets. However, we can make it have more impact on people by making it a behavioral belief. Now it might become, “I trade sideways market bands.” This has much more impact on you because it reflects your behavior. Thus, it is a member of the behavior beliefs, second in the hierarchy.

Next, we could make a belief about sideways bands have even more impact on you by turning it into a capability belief. These beliefs typically have the words “can” or “cannot” in them. To make it more impactful, you might say: I can make 100% each year trading sideways bands.

Can you see how that would have more impact than a simple statement about sideways markets or the fact that you trade them?

We can move even further down the hierarchy and make the belief more important by turning it into a value belief. These are typically beliefs about what’s important for you and they typically imply importance (directly or indirectly) in the sentence. So, a value belief about sideways bands might be: It’s important to find a strong sideways band in order to make good money.

Does the hierarchy begin to make sense to you? If so, then we can go even deeper into the hierarchy and make the belief about you. This is what we call an identity belief because it is now about you. Typically, these beliefs start with the words “I am” followed by a noun or an adjective. Thus, if we wished to move further down the hierarchy with a belief about sideways market we might say: I am a sideways market trader.

Thus, we now have a statement about your beingness – a belief about who you believe yourself to be.

Lastly, we can move this belief down to the spiritual level by making it about you and God and/or your relationship to the universe. People go so far as to kill each other over spiritual beliefs, so we have to be careful here. Let’s create a spiritual belief about sideways markets:  God loves people who trade sideways markets and condemns those who don’t trade them to eternal hell.

Now can you see how the last belief (if you believed it) would have a tremendous amount of impact on you.

Useful and Non-Useful Beliefs:

Remember that most beliefs are useful within a context (or at least the situation in which they were formed) and not useful in other contexts. For example, you might have a belief that says “I am strong.” That might be useful in a situation where someone is trying to be aggressive towards you. It might also get you into a lot of trouble in that same situation, if for example, the other person had a weapon and you didn’t. It becomes important to determine whether a belief serves you or not by looking at what happens when you have the beliefs and what would your life be like if you didn’t have the belief. If the belief is generally useful under most conditions, then you should keep it. If the belief is sometimes useful and sometimes not useful, then perhaps you can find an alternative belief that will serve you more. And if the belief is generally not useful, then you should replace it. In an earlier article for Your Trading Edge, I talked about using the mind-to-muscle pattern for installing new, useful beliefs.

An exercise I recommend to all traders is to figure out your identity level beliefs with respect to trading. Determine what they are by doing a self-examination and then ask; “What do they get me into?” and, “Who would I be without the belief?”

By asking yourself these two things, you can determine how useful the belief might be. Non-useful beliefs should always be replaced. That is easy using the Mind-to-Muscle pattern as long the old belief doesn’t have emotional charge holding it in place. When it has emotional charge, you need to release the charge first, but that’s a topic for a future article.

Beliefs and Trading Success:

When I’ve modeled successful traders, I’ve found that they have certain beliefs in common that other traders don’t have. For example, I have compiled 108 beliefs that successful traders tend to have which I call Tharp Think. A number of those beliefs are given in my book, Trading Beyond the Matrix, and I’ll add a few more here just so you can see how important having such beliefs might be to your success. Here are five new ones:

  • I need to work on myself to clear all non-useful beliefs that lower my consciousness.
  • Finding a new non-useful belief to clear is an adventure and a chance to increase my consciousness and advance my personal evolution.
  • Doing this kind of self-work regularly makes me more awake and happy for no reason.
  • There is only feedback, not failure. But resistance and suffering are telling me what I need to be aware of and clear out.
  • I am a meaning maker. The meaning I give to life, to myself, and to my experience are all important.

I’d recommend that you use the mind to muscle pattern to install these five beliefs. And in the next article I’ll tell you about how stored feelings tend to attach themselves to non-useful beliefs and lock them into place.


Van K. Tharp, Ph.D., has written 11 books, each one making profound advances in the understanding of what creates trading success. His research and modeling work with successful traders has made his training programs among the most well-respected in the world. His Super Trader program offers the most advanced material at the Van Tharp Institute ( Take the short quiz he developed to learn your trading personality type and if you have the characteristics of a great trader. Go to


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