Are you a stockaholic? Can the principles of the 12 Step AA program help you?
AA was founded in the 1930s by two alcoholics, a traveling salesman and a doctor. They began meeting and encouraging one another to stay sober and others began doing the same. What these two men started owes its lasting success to the simple, yet life changing principles found in a 12 step program. In fact, it has been so successful that the twelve steps are now used for smokers, gamblers, drug addicts, overeaters, children of alcoholics, etc.
I am not an alcoholic nor do I personally know one (at least that I am aware of) but one thing I do know is the universal principles in the 12 step AA Program can easily be applied to stock traders. These principles have nothing to do with technical analysis and everything to do with how we can actively manage our emotions. The process involves the following: 1) admission of lack of control; 2) recognition of another source of strength; 3) examination of past errors with others’ help; 4) coming to terms with past errors; 5) learning to live a new life under a different set of principles; and 6) helping others do the same.
Here is the 12 Step STOCK TRADERS ANONYMOUS (STA) Program:
1. We admit that we were powerless over our emotions-that our trading had become unmanageable.
2. We came to believe that principles greater than ourselves could restore our sanity and profitability.
3. Made a decision to turn our will and our lives inside the charts over to certain principles as we understood them.
4. Made a searching and fearless trading inventory of ourselves and our trading account.
5. Admitted to our brokerage, to ourselves, and another the exact nature of our wrongs.
6. Were entirely ready to have these principles remove all defects of character.
7. Humbly ask that these principles remove our shortcomings.
8. Made a list of all our poorly executed trades, and became willing to learn from them all.
9. Made direct amends to such trades whenever possible, except when to do so would be of no benefit to our trading account.
10. Continued to keep a personal trade inventory, promptly admitting when a mistake had been made.
11. Sought through constant awareness and forethought to improve our relationship with the Market, as we understood it, asking only for the knowledge and the power for a patiently focused and disciplined trading plan.
12. Having been awakened to the error of our ways, we seek to carry the message to other stockaholics as we continue to practice these principles in our own trading affairs.
Each stockaholic has specific problems but all stockaholics suffer from the same general disease: lack of control. Only a good set of trading principles (a.k.a. rules) can help the stockaholic on the path of recovery. May the steps above help each of us navigate this path.
And for you crosshairs traders out there…see you tonight from 8:30- 9:30.
