Treating Traders With a Twelve-Step Program

     Who has not heard of Alcoholics Anonymous and its twelve-step program as a course of action for recovery from addiction, compulsion, and other behavioral problems?

I suppose we could argue that folks without such problems may not be aware, but did you know AA’s twelve-steps could be used to make you a better trader?

As you may know AA’s twelve-step programs have been adopted to many other behavioral issues. I’ll focus on “other behavioral problems” as the issue an average or beginning trader, and certainly the neophyte gunslinging aggressive “I-want-to-get-rich quick-by-day-trading” type.

These are the original twelve steps as published by Alcoholics Anonymous and why the program works: (source)

  1. We admitted we were powerless over alcohol—that our lives had become unmanageable.
  2. Came to believe that a power greater than ourselves could restore us to sanity.
  3. Made a decision to turn our will and our lives over to the care of God as we understood Him.
  4. Made a searching and fearless moral inventory of ourselves.
  5. Admitted to God, to ourselves, and to another human being the exact nature of our wrongs.
  6. Were entirely ready to have God remove all these defects of character.
  7. Humbly asked Him to remove our shortcomings.
  8. Made a list of all persons we had harmed, and became willing to make amends to them all.
  9. Made direct amends to such people wherever possible, except when to do so would injure them or others.
  10. Continued to take personal inventory, and when we were wrong, promptly admitted it.
  11. Sought through prayer and meditation to improve our conscious contact with God as we understood Him, praying only for knowledge of His will for us and the power to carry that out.
  12. Having had a spiritual awakening as the result of these steps, we tried to carry this message to alcoholics, and to practice these principles in all our affairs.

Now, before proceeding, AA says that the ONLY requirement to join AA is a DESIRE to stop drinking or change a lifestyle built around booze. It doesn’t say you must be a falling down drunk with a rap sheet and now living in the gutter. It doesn’t even say you have to stop drinking, though strongly suggested. It simply says, if you have a desire to change, consider them.

For traders, that illustrious, adventuresome, fearful yet greedy risk taking crowd, what kind of issues do they confront before becoming so overwhelmed that they indeed need help, perhaps an intervention?

1. They blow up their trading account.
2. They come back with new money.
3. They blow up the second account
4. They return a third time with less money or worse yet, maybe even borrowed money, but in either case are now playing with scared money.
5. They scramble for abbreviated book versions of “How to make money in the stock market,” read it in an hour and just to be safe, move on to
6. quick reads of 100 websites, out of the 100 million dedicated to the topic of trading, and pick out what they deem useful, all within an evening or two.
7. Now armed with that massive overload of questionable information (and even if it were excellent material) they try again. Maybe a win, maybe a loss… they try again and again and again until
8. They blow up the account.
9. Bewildered, confused, frazzled, angry and bitter, they cuss out everything (warning: rough language) from their computer screens to politicians to their keyboard, weather, wife, kids, dogs and cats.
10. Conclusion: the market is rigged (it is) and you can’t make money in the market.
11. Maybe, he or she speculates, maybe the currency or commodity market is more my style.

For this individual, the new twelve-stop Traders Anonymous program is born. To the best of my knowledge there is no such thing… the closest might be Gamblers Anonymous.
Real traders know they are not gambling, taking a calculated risk yes, but not just betting it all on red or black.

The twelve-step Traders Anonymous program and why it works:

  1. We admitted we were powerless over get rich quick trades—that our lives had become unmanageable.
  2. Came to believe that a power greater than ourselves could restore us to sanity.
  3. Made a decision to turn our will and our trading lives over to the care of a coach as we understood him.
  4. Made a searching and fearless moral inventory of ourselves, our motivations, our goals, our trading plan.
  5. Admitted to our coach, to ourselves, and to another human being or pet the exact nature of our wrongs.
  6. Were entirely read to have the coach remove all these defects of trader behavior.
  7. Humbly asked him to remove and correct these shortcomings.
  8. Made a list of all persons we had harmed, usually ourselves and family, and became willing to make amends to them all.
  9. Made direct amends to such people wherever possible.
  10. Continued to take personal inventory of our knowledge level, our limitations, acknowledged weaknesses, and developed real trade plans with a specific discipline at its core.

11. Sought through whatever medium to improve our conscious contact with market developments and our coach, seeing only knowledge and constant improvement in positive trading habits.
12. Having had a spiritual awakening as the result of these steps, we tried to carry this message to traders with similar issues, and to practice these principles in our affairs.

Certainly not all beginning or wanna-be traders fall into the negative aspects of trying to make money in the market. But I have run into my share of wanna-bes that simply can’t or won’t take direction even after paying to receive that direction. Human behavior and habit are powerful things and each of us comes to the market with unique motivations, aspirations, expectations and our levels fear and greed.

Trading is about behavior, yours plus what you see displayed on the charts. You can’t fake it, either you know what you’re doing or you don’t.

Incidentally, there is no free coffee at Trader Anonymous meetings.

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About wallstreetpirate

Thirty-five years in financial services from insurance to registered investment adviser, and trader (now retired). Currently helping wanna-be traders and experienced alike as a trading coach and mentor. I've been in and around, on top of, in the middle of, and on the bottom of the stock market for a long, long time. Here's all I've learned: Trading is about behavior, psychology, and appreciating what the charts are saying technically. You can't fake it. Either you know what you're doing or you don't. And as much as this isn't rocket science, it takes knowledge and a skill set to survive.
This entry was posted in culture, day trading, lifestyle, Stock Market, stock market trading, trader psychology, Trading Stock Market and tagged , , , , , , , , , , , , , . Bookmark the permalink.

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