As a new trader I did not understand a part of a trading book where Alexander Elder was talking about how bad traders can be like alcoholics and may even benefit from going to AA meetings. That truly baffled me. Surely trading is just math and numbers and learning what to do. What does addiction and self control have to do with it? As I took my journey through trading I learned a lot of lessons myself on how we can become consumed by emotions and ego in trading. The mental game may be the toughest part of trading. We have to find a system that fits our personality and position sizing that is comfortable enough to let our mind stay in charge. I have watched so many traders be ruined mentally and emotionally in trading, you can come back from financial losses but emotional ruin generally signals the end of ones trading career. Here is Al-Anons 12 steps interpreted for traders that have gone down the wrong road in trading and need to get back on track.
The 12 Steps of Failed Traders Anonymous
- We admitted we were powerless over the market action—that our trading had become unmanageable due to our ego.
- We came to believe that price action was greater than our opinions and predictions and that following it systematically it could restore us to profitability.
- We made a decision to turn our trading over to entry and exit signals that were within the context of a robust method that fit our personality.
- Made a searching and fearless inventory of our trading results.
- Admitted to our family, to ourselves, and to another trader the exact nature of our bad trading.
- We are entirely ready to to trade a robust method with discipline to remove the defects of our trading.
- Humbly trading a good system to remove our shortcomings as an emotional trader.
- Made a list of all horrible trades that have harmed our trading capital, and became willing to not trade like that again.
- Researched our trading history to directly understand why we made such bad trades.
- Continued to take personal inventory when we were wrong and promptly admitted it.
- Sought through mindfulness to improve our trading consciously, trading only with our understanding or our system and based on actual price action not beliefs or opinions.
- Having had a trading awakening as the result of these steps, we tried to carry this message to others, and to practice these principles in all our affairs.