In the early hours of yesterday morning, I picked up the phone and heard a woman sobbing loudly.I did not recognize the phone number or the voice, so I knew it was not a relative or friend.Still half-awake, I asked her how I could help her.It was yet another tale of sorrow, struggle and the inability to make ends meet. She was a single woman who lost her job and turned to scalping in the DJIA mini-futures to make enough money to save her house and pay her bills.She had been trying for four years to trade and was losing steadily. Her equity was going down every day and she was desperate to understand why.
"Why?How can this happen to me?I am smart, educated, good with numbers and even trained myself to be a professional blackjack player. I trade one contract and every time I lose money, I go into a total tailspin.I get so emotional that I can't recover.I thinkI need some kind of medication to get me through thisbecause I am at the end of my rope.
I backtest my system every time I change it and I change it often.When I trade on paper, I make good money, but as soon as I go into the markets, I lose. If I had my job back or any other job, I would leave trading in a heartbeat.I don't know what to do. Please help me?"
In less than ten minutes, I heard almost every mistake a trader can make.Almost.
Symptoms:
Trading with "scared" money Trading from a state of desperation and fear Ruled by emotions and unable to take a loss Changing her trading plan often Trying to be perfect Looking for medication to deal with emotional issues over trading Adopting a trading technique (scalping one futures contract) that is beyond her level of trading competence Attached to the outcome of each trade Not committed to the process of learning to trade-using trading as a temporary "stop-gap" source of income until something else becomes available. Acting out personal dramas in the financial markets
Diagnosis:
Financial Anxiety Disorder ( FAD) with depressive components, leading to maladaptive trading behavior.
Possible gambling addiction. (Not enough information to confirm or deny)
Treatment:
Stop trading and look elsewhere for a source of income.
Find a competent, compassionate, communicative and transparent financial advisor to help with this aspect of her life.
Increase social or family support to mitigate isolation.
Begin a regular program of yoga to reduce anxiety.
Thanks and Good Trading!
Janice
Janice Dorn, M.D, Ph.D.
