recently, I have been reviewing the book by Alexander Elder, Trading for a Living, reviewing his concept of the three Ms: Mind, Method and Money Management and I find it funny the way he treated the psychology the trader, traders comparing the losers with Alcoholics Anonymous. Elder recommended investors to operate in the stock market faced with losses in the same way that people in Alcoholics Anonymous is facing alcoholism. Even advised his “twelve-step method”, replacing the word alcohol with the word loss. Elder explains: The drinker can not resist the temptation because he continues to feel and think like an alcoholic. The trader does not know how to prevent losing their habit because it continues to lose feeling and thinking as a player. The alcoholic’s life goes downhill, out of control, when he denies being an alcoholic.
He denies that alcohol control your life and feeds the fantasy that is able to leave at any time (as smokers). Or think to change or reduce a drink bit is the solution to the problem. The trader losing his mind erodes gradually merging savings, being plucked while denying that it has lost its way in the markets. You can not accept the painful truth and the hidden himself and others. He speaks of his successes but never their failures. The drinker of Alcoholics Anonymous sobriety learns that begins in the mind of people. Traders learn to survive on the Stock Exchange that the problem was not with the methods or in the market, was in their minds.