sarwesh

A social drinker enjoys an occasional drink, but an alcoholic craves alcohol.
He denies that alcohol controls and destroys his life - until he reaches a personal
crisis. It may be a life-threatening illness, unemployment, desertion by
a family member, or another unbearably painful event. AA calls it "hitting
rock bottom."
The pain of hitting rock bottom punctures an alcoholic's denial. He sees a
stark choice- to drown or to turn and swim up for air. His first step to recovery
is to admit that he is powerless over alcohol. A recovering alcoholic can
never drink again.
Loss is to a loser what alcohol is to an alcoholic. A small loss is like a single
drink. A big loss is like a bender. A series of losses is like an alcoholic
binge. A loser keeps switching between different markets, gurus, and trading
systems. His equity shrinks while he is trying to re-create the pleasurable
sensation of winning.
Losing traders think and act like alcoholics, except that their speech is not
slurred. The two groups are so much alike that you can predict what a loser
will do by using alcoholics as a model.
Alcoholism is a curable disease-and so is losing. Losers can change if
they start using the principles of Alcoholics Anonymous.

The Urge to Trade


Successful traders treat drawdowns the way social drinkers treat alcohol.
They have a little and stop. If they take several losses in a row, they take that
as a signal that something is wrong: It is time to stop and rethink their analysis
or methods. Losers cannot stop- they keep trading because they are
addicted to the excitement of the game and keep hoping for a big win.
One prominent trading advisor wrote that the pleasure of trading was
higher than that of sex or flying jet aircraft. Just as an alcoholic proceeds
from social drinking to drunkenness, losers take bigger and bigger risks.
They cross the line between taking a business risk and gambling. Many
losers do not even know that line exists.


Losers feel the urge to trade, just as alcoholics feel the urge to drink. They
make impulsive trades, go on trading binges, and try to trade their way out of
a hole.
Losers bleed money from their accounts. Most of them bust out, but some
turn to managing other people's money after they lose their own; still others
sell advisory services, like burned-out drunks who wash glasses in a bar.
Most losers hide their losses from themselves and from everyone else.
They keep shuffling money, keep poor records, and throw away brokerage
slips. A loser is like an alcoholic who does not want to know how many
ounces of liquor he drank.

Into the Hole


A loser never knows why he loses. If he knew, he would have done something
about it and become a winner. He keeps trading in a fog. A loser tries
to manage his trading the way an alcoholic tries to manage his drinking.
Losers try to trade their way out of a hole. They switch trading systems,
buy new software, or take tips from a new guru. They act out a rescue fantasy
- a charming belief in Santa Claus. Their desperate belief in magic solutions
helps many advisors sell their services to the public.
When losses mount and equity shrinks, a loser acts like an alcoholic
threatened with an eviction or a firing. A loser grows desperate and converts
outright positions into spreads, doubles up on losing positions, reverses and
trades in the opposite direction, and so on. Losers get as much good from
these maneuvers as an alcoholic who switches from hard liquor to wine.
A losing trader careens out of control, trying to manage the unmanageable.
Alcoholics die prematurely, and most traders bust out of the markets
and never come back. New trading methods, hot tips, and improved software
cannot help you until you learn to handle yourself. You have to change how
you think in order to stop losing and begin your recovery as a trader.
Losers get drunk on losses; they're addicted to losses. Traders prefer profits,
but even losses provide plenty of excitement. The pleasure of trading is
very high. Few losers are actively trying to lose - but then few alcoholics are
consciously trying to end up in the gutter.
A loser keeps getting high from trading while his equity shrinks. Trying to
tell him that he is a loser is like trying to take a bottle away from a drunk. A
loser has to hit rock bottom before he can begin to recover