Trading can become an addiction for some people, especially those who are prone to addictive behavior. The rush of adrenaline that comes with making successful trades can be addictive, and the desire to repeat that feeling can drive people to make more and riskier trades. In addition, the feeling of being in control and making independent decisions can be very appealing to some people, and this can also contribute to the addictive nature of trading.
The sense of accomplishment that comes with making a successful trade can be very rewarding, and people may become addicted to the feeling of accomplishment that comes with trading.
However, it is important to note that trading addiction can have serious negative consequences.
We generally label a behavior as an addiction when people seek out the activity even in the face of demonstrable negative consequences. It is the inability to stop the activity when those consequences interfere with life that marks any addiction.
An addiction occurs when an activity provides a strong source of stimulation that, over time, leads to psychological and sometimes physical dependence.
Warning: You can Win Some Gambling but Can Lose More
People who become addicted to trading may begin to neglect other aspects of their life, such as their relationships, job, and health. They may also suffer financial losses as a result of their addiction, which can be devastating. Unless you look in the fine print you won’t hear brokerage firms, trading publications, or seminar producers on this issue for the most part. The majority have a common aim to have as many trading and buying trading-related products as they can. For many, especially those addicted there is a fine line between gambling and trading.
According to a research review in the Oxford Textbook, rates of depression are significantly higher among people with addictions than in the general population, with indications that people are using the addictive activities to medicate themselves for the pain of depression. These levels have soared with 24 hour, seven days a week crypto trading.
If you feel that you may be developing a trading addiction, it is important to seek help. This can include talking to a therapist or counselor, joining a support group, or seeking professional help from a financial advisor. Addictions are common among individuals with attention deficits and hyperactivity problems and appear to be related to sensation-seeking among those needing stimulation. All those red and screen flickering prices are a magnet for this.
If you a prone to other addictions, a so-called addictive personality they can all be related and feed on one another. Think drugs, sex, drinking and gambling. The dynamics of addictions are connected.
It is essential to have a trading plan to control and alert to any addictive or destructive tendencies. For peace of mind and for your financial survival. This will set you on a path of identifying a problem. Here are a few questions that you might ask yourself:
Do you Answer Yes to any of these questions?
- Have you stopped trading, but still found myself placing trades?
- Do You find yourself becoming frenetic when trading, over-trading by putting on positions with too large size?
- Are you trading for the sake of trading?
- Are you trading during periods of no liquidity?
- Have trading losses created problems in relationships?
- Have you sought out more clouded markets such as penny stocks and ‘shit coins’? Have they caused financial problems for me?
- Have you bounced between trading rooms hoping for that trade rather than understanding a trade?
- Have people close to me told me that I need to stop trading?
- Is the pain from losing more extreme than the satisfaction from winning?
- Do you find moods fluctuating with yours wins and losses?
- Has trading taken over your life, at the cost of other work and relationships?
If you answered yes to three or more of these questions, trading may have become a problem for you. Once you identify that, seek help to identify and channel your addictive triggers in productive directions. You may find yourself suited to certain types of trading, products or times. You may not be suited to trading at all and a more passive approach to investing is more your speed. For an addictive personality that may be hard to admit to, and why you need a plan.
It is important to remember that trading should be a responsible and informed decision, not a compulsive behavior. It can be very easy to lose discipline in the markets through addictive patterns of behavior.
From The TradersCommunity Wellness Desk