Risk management guru Van Tharp has passed away

M

Market_Observer

My condolences to Van Tharp and his family.
https://www.vantharp.com/trading/van-turns-to-light/

Van Tharp's books are must-reads for the topic of risk management.
Risk management is a topic that should be learnt before traders/traders think about making money from the markets.

It is a dangerous thing for a novice to make huge gains from a bull market in his first year. He is likely to give his gains back and more to the market when the bear market eventually comes. However, if he had mastered and appreciated risk management, his losses will be mitigated.

Risk management is far more important than profit-making strategies because it is meaningless to make profits today that you will lose tomorrow. Risk management protects past profits. Therefore, learn risk management first, then learn about making money from markets.

Another good reason to learn risk management is it is much easier to learn than profit-making strategies. Markets change. Strategies that make money today may not make money tomorrow. Market participants have to adapt constantly. This is so difficult. However, risk management rules don't change. The stuff you learn about position sizing, diversification, cutting losses stays and remain useful forever.

Van Tharp's books have been a great contribution to Risk Management.
 
That's a loss, my condolences. I knew Van personally, we talked on the phone and were planning to do more webinars together.

His teaching re position sizing is one of the most valuable concepts in active trading. It's genuinely sad to permanently lose someone. Especially an industry leader and nice guy like Van.
 
Van Tharp was interviewed in the original Market Wizards book. Although he was not a full time trader himself, he was a trading coach. But he did learn a tremendous amount from all the profitable traders he coached and he passed on this knowledge to us.

He was a Psychologist but a lot of his trading education also focused on Risk vs Reward (R multiples) and constant reminding to traders to focus on position sizing as the best way to boost profits once you a have profitable trading approach.

Although he didn't invent the concept himself, he did popularise R multiples through his work. I still use this concept every day in my trading and will continue to do so.
 
Rest in peace Dr. Van K Tharp

Your legacy lives on.,.. many traders understand the important of position sizing and risk/reward metrics in systematic trading through your concepts.

I learned about R multiples from your books/papers over twenty yeras ago and still use it daily.
 
ZBZB said:
He worked for a Florida hedge fund that turned out to be a ponzi.
More...

I don't think Tharp worked for it.

One of his 'best' students fooled Tharp into thinking he was making 50% returns in a large fund (for its time), without hardly any drawdowns (falsely claimed he had just 5 losing months in 78 iirc).

Really Tharp was gullible in that he believed those numbers. And Tharp told everyone how amazing his student's performance was. The student was a good conman. Ranked #1 hedge fund in the world at one point by Barrons. But described as a psychopath by the FBI. As he even scammed money from his own mother :wtf: for the Ponzi.

Tharp himself lost money in that Ponzi and then got sued by his other students for 'recommending' the fund to them.

Link to a very good audio interview with the FBI agent who busted the case:

https://jerriwilliams.com/bret-hood-hedge-fund-ponzi-scheme-maricopa-investment-fraud/
 
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Mr. Tharp did a tremendous service to the small group of aspiring traders who were looking for real facts about the reality of trading.

And it all starts with risk management, so you can define the maximum loss and calculate the multiple.

His book changed me from looking for the ability to predict the market to looking at the ratio of win amount to loss amount over many trials. Statistics!

Rest in peace good friend! :)
 
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