Losers Anonymous

I would like to start a thread on a topic suggested by Alexander Elder. He suggested in ‘Trading for a Living’ the idea that there are lessons to be learned from AA.

I will list the ‘steps’ from AA – but will freely admit I have no experience with the organisation. At some point I hope to be able to post the respective chapter of his book on attachments – or someone else can post.

I am not sure if this thread will garner any interest on FF, but I feel that it could be of worth. Basically we are here to admit our trading errors – to acknowledge our mistake(s) and make the commitment to not repeat them.

If you come here in a light mood and start making jokes – I expect you won’t get much out of this thread.

The only thing that separates us from the lifestyles we deserve is that we don’t take our trading losses seriously enough to address them systematically and methodically until they are gone.
Draw-downs are an inevitable part of trading, and we need to remain constantly aware of whether our current drawdown is due to the statistical variance of the system we are trading or due to the disease of losing money.

What I hope is that we can come together with sincerity and address our disease of losing money until we are each cured.

1. We admit that we are powerless over draw-downs – but that losing money has made our continued trading unbearable.
2. We have come to a belief that a power greater than ourselves can restore us to profitability. (wether that is a higher power or our own trading plan)
3. We make a decision to turn our trading over to the care of our trading plan as we understand it, and then develop our trading plan where necessary according to our highest wisdom.
4. We will make a searching and fearless inventory of our trading performance.
5. We will admit to others the exact nature of our wrongs.
6. We are entirely ready for the market/higher power to help remove these defects of character.
7. We humbly ask the market/higher power to remove our shortcomings.
8. We will make a private list of all the markets we have lost to, and be willing to profit from them all.
9. We will make direct amends to people we have hurt through our trading losses, except when to do so would injure them or others.
10. We will continue to take a personal inventory and when we are wrong promptly admit it.
11. We will seek through prayer and meditation and study to improve our conscious contact and relationship with the market.
12. Upon maintaining profitability for an extended period, we will carry what we have learned and give it to other Trading Losers, and practice the principles of profitability in all of our trading.

Lately, I've been bothered by every new self-proclaimed "guru" thread.
This is a very refreshing change. Kudos to you!

I'll start...

Hi, my name is Intu....

Generally, when I trade I am very focused, but also tense and stressed.
I get angry when I lose money very quickly.
When facing a losing day overall, I am usually unhappy.

The result of these two situations is that I have had a tendency to lose more than 10% of my account
in a single day (over-trading, revenge trading).

I am working on recognizing these emotions and avoiding further disasters.

Welcome.

This statement i read on another thread must be the case - because I can't seem to stop myself overtrading.

I sit down and find entries everywhere - and struggle with the discipline to only take the best entries - or only perfect one entry at a time.

Trading too many entries dilutes my focus and subsequently my performance as I am unable to achieve any consistency.

Trading poorly then brings out negative emotions which often has the result of facilitating the taking of further poor trades, or the breaking of some rules.

I will develop the discipline that if I break any rules according to my Trading Plan - I am no longer able to trade for that day.

I myself can't help but over trade, then I realized thats who I am. So I decided maybe I can come up with a trading style that suits me (hedging pairs, avg down, etc)

I mean you can't tell an alcoholic to keep drinking but just to change his lifestyle around it..lol.

That’s a good observation. Though I’d go as far as to say that you’re not taking the whole business of trading seriously. What separates you from the lifestyle you deserve is lack of commitment. And I don’t mean it in any disrespectful way, after all, in the past I used to be in this category myself.

If you stop for a few minutes and think deeply about where discipline comes from, then you might realize that discipline is a function of commitment.

Commitment doesn’t necessarily mean being in front of the monitor 24/7 or studying markets. In the context of successful trading, commitment means that there must be congruency in your actions. Lack of self-discipline is self-sabotage.

You guys know that not being disciplined gets you into trouble, yet you continue acting against your best interests. Part of your psyche is not being committed to the success you deserve, and that’s why you don’t follow your plan. I’m sorry to be the bearer of the bad news, but lack of commitment comes from internal psychological conflicts. Other than being masochist, which you’re not, why else would you not act in your best interests?

Usually people want to be successful and make money so they can have the freedom which comes from financial independence. However the paradox is that to get to such level, there must be rules created and followed, which ironically to most people implies lack of freedom. And it becomes a viscous circle. There are other dynamics, but for time being you have something to think about. I hope it helps and wish you all the best on acquiring the necessary skills as fast as possible

a loss should be taken lightly not seriously. i guess you meant mistake, not loss.

Very good point silverheat

On that note, ditto for winning trade which resulted from a mistake.

I dissagree. A loss should be taken seriously. It is giving you information which could be about the market or about you. Channel your emotions into using that information in the best way possible rather than crawling into a fetal position on the floor, and sobbing because you didn't get what you wanted. Or just admitting and ignoring your emotions is also the wrong approach. Pretending that it didn't affect you is not seizing an opportunity to react positively to the information the loss/mistake gave you.

My name is ego and I'm a winnerholic

losing is a skill, nothing you want to avoid as a trader, on the contrary

imagine i don't want to lose or the next trade will be a winner, you are then trying to force the market to behave according to your bias, unfortunately the market gives a shit, so when the market is on your side, everything's alright, so it seems, but when you lose, you won't take the loss when it is not going, you are in the red and say to yourself i get out at break even, why? because you can't let go, because at break even you can say i didn't lose, i was right

Very good thread topic! If I may, let me add a couple of comments.

We come to the markets with lots of beliefs and expectations, many of which are totally unfounded. Until we become aware of and then thoroughly question and explore those beliefs, we are likely to struggle.

Many of those beliefs are centered around desire for pleasure ("the lifestyles we deserve...") or avoidance of pain ("losing money has made our continued trading unbearable."), and around ideas on how to achieve that.

I'd like to suggest that as long as you are motivated by a desire for pleasure and avoidance of pain, trading will continue to be a tortuous process. Another approach is needed. Instead of being long-winded, here's a poem by Rumi that illustrates my point:

Guest House

This being human is a guest house
Every morning a new arrival.
A joy, a depression, a meanness,
some momentary awareness comes
as an unexpected visitor.
Welcome and entertain them all!
Even if they are a crowd of sorrows,
who violently sweep your house
empty of its furniture,
still treat each guest honorably.
He may be clearing you out for some new delight.
The dark thought, the shame, the malice,
meet them at the door laughing,
and invite them in.
Be grateful for whoever comes,
because each has been sent
as a guide from beyond.

In the context of “losers anonymous”, I’d say that everything is a mistake, since they should not be trading at all till they get their stuff together.

They’re not trading but gambling. Lack of discipline will lead to overtrading which is synonymous with trading randomly. Under such circumstances I’d say that every single trade is a mistake, even winners.

Usually people blame losing trades on lack of discipline, and yet they take credit for winners. This random reward is not only addictive, but fosters illusions, and it can be for some people very hard to get out of.

This will probably stir some people up, because people like to believe that they’re in control, yet the lack of control (discipline) that is necessary for flawless trade execution clearly argues against them. That’s at least how I view it.

"the lack of control (discipline) that is necessary for flawless trade execution clearly argues against them"

assuming we have an edge - and if we don't we obviously shouldn't be trading - it is indeed whatever gets in the way of our flawless execution which is the barrier to our future success.

Contributions have been great guys - and I think really helpfull.

I would like people to be comfortable venting their weaknesses in this space also. Lets not just bash people for losing money unnecessarily - that is just the path of progress.

It should also be remembered that it was Alexander Alder which coined the phrase 'losers anonymous' when he realised which part of himself most contributed to his lack of success at trading. It was coined by a great trader - and this path of progress and recognition within ourselves is just what every successfull trader goes through before they reach consistent profitability and 'flawless execution'.

On the topic of discipline/control one may ask who is controlling what and why?

Are some emotions and instincts that are perceived to be "barriers to our future success" to be controlled by the one who wants success?

That would imply trading based on inner conflict...not likely to be successful, I believe.

Instead, those emotions and instincts should be explored with an open mind - if for no other reason than the fact that they will win in the end if not attended to.

Also, successful traders tend to be able to trust their gut - a principle that holds outside of trading too. See http://www.theluckfactor.com/index.asp

Sarythsaya, you said,

"assuming we have an edge - and if we don't we obviously shouldn't be trading - it is indeed whatever gets in the way of our flawless execution which is the barrier to our future success."

I would like to see some discussion regarding "edge."

How do I know if I have an edge? I may have a theory behind my method that suggests an edge but the proof is in my P/L. I can try to backout stupid mistakes and discipline breakdowns and then look at an implied profit with increased discipline. I can backtest, sometimes. Some strategies are difficult to backtest. The less mechanical and more discretionary a strategy is, the more difficult to backtest.

Would be interesting to see a group of traders trading the same method, same timeframe, same pairs, comparing real live results.

Archie

I lost around 200,000 (usd) over a 20 year period. Never had a profit.
The realisation I will never get it back is killing me. Trading the forex is evil and has f$%^&ked my life.

How can trading forex be evil? Foreign exchange facilitates so many transactions. The whole world benefits from foreign exchange.

Don't blame the market for your incapability. The market itself is not good and not evil, it is just the market.

Evil. Yes. In a gold rush only the shovel makers make money. Long term all speculation is a losing proposition.