Janice Dorn, MD, PhD
Neuropsychological Trading Coach
Janice Dorn, M.D., Ph.D., has been a full-time futures trader since 1994. Doctor Janice holds an M.D. in psychiatry and is board-certified by the American Board of Psychiatry and Neurology in general psychiatry and addiction psychiatry. She holds a Ph.D. in brain anatomy. A graduate of Coach University, she is a pioneer market psychiatrist and financial neurobehaviorist. Doctor Janice has written over 500 articles on the financial markets and coached over 600 traders worldwide. She is the Global Risk Strategist for Ingenieux Wealth Management Group, Sydney, Australia.
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Money is a singular thing. It ranks with love as man's greatest source of joy. And with death as his greatest source of anxiety. Over all history it has oppressed nearly all people in one of two ways: either it has been abundant and very unreliable, or reliable and very scarce. ...John Kenneth Galbraith, "The Age of Uncertainty"
After the markets fell in the spring of 2000, when the NASDAQ dropped almost 40% in two weeks, there was a wonderful piece in the New Yorker, written by David Owen. Although satirical, the message of this piece is powerful. I am acutely aware that many in the markets over the past two weeks have asked themselves the question posed by Mr. Owen: "What happened to my money?" (Fierce Pajamas: An Anthology of Humor Writing from The New Yorker, edited by David Remnick and Henry Finder)
Mr. Owen proposes that their money went to be with God in Heaven. It is no longer with them, but it is in Heaven, and they might go to Heaven, too, one day. He goes on to say that they can never have that money back, but they can dream about it. That money is not there to buy that BMW they planned for or to pay for their children's college education. Finally, Mr. Owen throws in a couple of sentences about everything being OK as long as they have love and happiness in their hearts.
A fascinating thing about satire and self-deprecating humor is that it rings true with so many people. People actually do believe that they still can have that money in their dreams and that one day they may come to be reunited with their money. Until that great reunion, they can have pleasant thoughts about their money and all the things they were going to do with it.
Far be in from me to sit in judgment of those ideas. If that is what people believe, and that is the way that they are able to rationalize the loss of money, so be it. If money makes the world go 'round, then different ideas about money may make it go 'round even more. How do I know? Well, how do you know? What do we really know about all that money?
The one thing I know for sure is that money you have lost is gone. It is no longer in your account. It was in your account—but does that make it your money? No. It is not your money unless you make it and keep it. Unless you do everything in your power to protect that money (risk management, position sizing, stops and profit-taking), you will lose it—and once you lose it, it is no longer your money. In fact, it never was your money. It was sitting there as numbers in your account, but it is not actually your money unless you take it.
Seeing your account balances go down is painful. Actually, losing money is a kind of mind-numbing sensation where time passes more slowly, colors are muted, and the sense of self is changed. Losing and continuing to lose is like being pulled downward into a swirling vortex. We feel helpless, physically nauseated, and lost. We don't know what to do. What happened to all the money that was in our accounts? How could it disappear over night? What went wrong?
It is easy to look outside for the source of your own difficulties. It is easy to blame the markets, the hedge funds, the Plunge Protection Team, another country, your broker, a newsletter writer, your wife or your dog. The list of people, places and things to blame is endless. This type of attitude is just like putting a tiny steri-strip bandage on a large, gaping wound. It doesn't stop the bleeding, and it misses the major issue. This issue is that you, and you alone, are responsible for your money. No matter how much abstraction you apply to this situation, it was your decision to put your money into the market. No one forced you or held a gun to your head to make you do it. Once your money is in the market, it is your responsibility to manage it and protect it. If you win (take profits or cut losses short), it is your own doing. If you lose (do not take profits, let losers run), it is your responsibility.
Please take some time to read and re-read the top 10 Biggest Blunders Investors and Traders Will Make in 2006-2007 (Part I, Part II). You will see the theme of personal responsibility come up frequently because it is the bedrock of good trading. Until you are able to look yourself in the mirror and not only say but actually believe that you are responsible for everything that happens in your trading and your life, you will fail to progress and continue to suffer in a state of denial.
The surest way to ruin a man who doesn't know how to handle money is to give him some...George Bernard Shaw
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