My therapist tells me to take random things and relate them to trading. Yes, I have a therapist...mind your own business. I was watching this movie titled "Two for the money," and there was a scene in the movie I was fascinated by. I got a copy of the script and here is the scene I am referring to (I edited the language).

WALTER: We're here for the gambler's anonymous meeting...
INT. MANHATTAN APARTMENT - DAY The GROUP sits in a circle, listens as a BUSINESSMAN, near tears, gives his testimony.

BUSINESSMAN...I mean you'd think with two mortgages out, repo guys staking out my car, my job on the line and my wife threatening to leave, you'd think I'd have the brains to stop, instead of staying in the chase, doubling down, which of course is what I did...I know I'm sick because I keep thinking if I just pulled that game out then I got a lock on the parlay and I'm flush going into Monday night and-- (breaking down, unable to continue)

MEMBER #1... It's a disease, Leon.

MEMBER #2 Admitting you have a problem is the first step.

BUSINESSMAN/LEON Then I guess I'm doing pretty good because I got one big $@#%* problem. Someone claps. Everyone joins in. LEON smiles. Warm beat. WALTER suddenly stands. BRANDON watches, concerned.

WALTER: My name's Walter. I'm new to the group. (various "hellos") Hi. I've been going to meetings like this for 18 years. Once a week, every Friday night, for 18 years. This, my friends, is my 936th consecutive meeting. (enthusiastic applause) Thank you. Thanks. And my hand to God, I haven't been to a track, casino or bet a game that whole time. Not a cent. (murmurs of approval) I've listened to thousands of sob stories by people like Leon here, and I gotta say, Leon -- if I learned one thing it's that gambling is not your problem.

LEON: It's not?

WALTER: Not even close. You're a lemon. Like a bad car, there's something inherently defective in you. And you. And me! All of us here-- we're lemons! Big, juicy, acidic, ice-tea flavoring lemons! We look like everyone else but we're defective because when most people make a bet they want to win, while we, the degenerate gamblers of the world, we're subconsciously playing to lose. All humans like going to the edge of the abyss, but what makes us different is we go all the way and hurl ourselves off into the void! And we like doing it so much we do it time after time after time! Me? I always felt most alive when they were raking away the chips, and every one here knows what I'm talking about. People like us, even when we win, it's just a matter of time before we give it all back. But when we lose, and I mean the kind of loss that makes your ^%$& pucker to the size of a decimal point, there's a moment when you're standing there and you've just recreated the worst possible nightmare this side of malignant cancer for the 20th damn time and you suddenly realize -- hey, I'm still here, I'm still breathing, I'm still alive! In order to really live you have to be aware of your own mortality -- and a losing bet of a certain size is one of the best ways. I know of getting that feeling. When you win, you defy death,but when you lose, you survive it, and that's remarkable! Us lemons, we mess things up on purpose! We need to constantly remind ourselves that we're alive! Gambling's not the problem, Leon, your messed up need to feel something, to convince yourself you exist, to test what's really real, that's the problem!

BICYCLE MESSENGER: Hey! You're the guy I see on tv every weekend selling bettingpicks!

WALTER... Yeah. So?

BICYCLE MESSENGER: This guy peddles a tout service on tv.

WALTER: Check the charter, buddy, we all left our jobs at the door.You gonna toss an ex-alcoholic bartender out of an AA meeting? WALTER(handing out business cards) -- Here's my card -- we're topping 80 percent this season -- put it in your wallet, in case you fall off the wagon --

"Walter" is played by none other than Mr. Al Pachino. What fascinated me about this scene was how it applies to trading psychology. In my opinion, the hardest part about trading is not learning all the technical analysis, it's not learning all the different markets, nor the little nuances about the business. It is dealing with your emotions. Staying motivated, keeping a healthy mind, coping with losses, staying focused, avoiding self-doubt, etc. (Now you can see why I consult a professional) This is hard work! In the script above when Walter mentions that it's not Gambling (Trading) that is the problem, but that it is something on the inside that is inherently wrong with us, something inside me said "Ah-Ha!" I can recall all the bad losses I've taken like they happened yesterday, and how I felt afterwards. Why do we feel more pain from a dollar lost than joy from a dollar gained?

I guess the reason I felt compelled to share this is to preach about trading psychology. We are all going to lose money. You might want to expect this going in, plan for it, that way it never gets to the point of wiping you out. The next time you approach that bet, and you lose, remind yourself why you trade. What made you get into this business? Why do you put yourself through this?

Think of that loss as one loss out of the next thousand trades. Seems inconsequential doesn't it? I preach about a 285% year last year. Seems amazing doesn't it? What most people don't know is I only made money 35% of the time I traded. Imagine having to cope with that mentally, knowing that the probability of sucess on this trade is slim. My advice to you would be to continuously work on coping with handling losses. Stay positive! None of us have a crystal ball, but some of us manage to stay in the game when others don't. There are plenty of resources on trading psychology. I suggest you put a lot of effort into bringing a positive attitude to the table, and shrugg off a loss as if you knew it would happen, and it was all a part of your learning experience and your greater plan of becoming a better trader.

Posted by Option Addict on 7/20/2006 at 2:27 PM | Permalink