Sophia Todorova– FXStorm
As Forex traders we flirt with potential addiction on an ongoing basis. It is probably fair to say that a large percentage of traders will at one point throughout their careers, will have experienced some addiction symptoms. It requires presence of mind, to be able to step back and assess our behavior from time to time.
For clarification, we’ll define what addiction is. According to Wikipedia, an addiction is “a persistent behavioral pattern marked by physical and/or psychological dependency that causes significant disruption and negatively impacts the quality of life of the organism”
From this definition, we can glean that it is possible to become dependent on anything, given the right conditions that will facilitate a state of dependency.
When we think of addictions we usually think of alcohol, drugs, and gambling. But could it be possible to become addicted to the risk, the adrenaline, or the money that trading the forex affords?
Though there may be few obvious physical symptoms when one develops a dependency to trading, its psychological effects are to no extent less serious. A recovering drug addict once shared his experience with me. He told me that after his first time using cocaine, all his subsequent uses had been in a futile attempt to regain the intensity he had felt with that very first high; and each time it required a little bit more to get him near enough to that state. He lost his family and everything he owned as a result. Make no mistake, addiction, in whatever form it may take, is a very serious issue. It could be compared to being the passenger on an out-of-control train, knowing that crashing is an inevitability, but feeling powerless to do anything about it.
Many others who addressed this subject of trading dependency before, emphasized the addictive personality tendency of some traders which allows them to be taken in by addiction. To focus too closely on this factor, however, is to overlook the fact that even the most rational of individuals can become addicted to trading quite easily; addictive personality or not. Speaking specifically of the forex market, it is so dynamic a phenomenon, it easily mesmerizes. Its state of constant motion facilitates the trader’s need to get involved, and for some, often it is more satisfactory to be in a losing trade than not to be in one at all. They feel a deep need to be in a trade, which I imagine is not unlike the need a cocaine addict feels for the drug.
Behavioral Symptoms of Trading Addiction
-Constantly thinking about trading, even when in other situations. You could be at a party and all you will be thinking about is how soon you will be able to leave so you can trade.
-Extreme emotional highs and lows. Here the trader gets into a state of euphoria when he has a win, while getting really depressed after a loss. It is a constant roller-coaster of emotion.
-Excessive risk-taking on trades: With addiction, the ‘highs’ the trader achieves increases proportionally to the level of risk taken.
-Excessive borrowing: Even after getting to the point where his trading account is wiped out, the addicted trader will borrow money from every available source in order to feed his addiction.
-Rationalizing is common with the addict. He creates a false sense of security by convincing himself that the next trade will be a winner. He trades without a stop loss, telling himself that he will manually close the trade if it gets past a certain level.
-Neglect of family life and other responsibilities.
-Neglect of personal hygiene and nutritional needs.
-Lying to family members and friends about your trading success.
How to Prevent/ Manage Trading Addiction
-As a preventative step it is useful to have a mentor, colleague, or friend who also trades, and is someone whom you can trust to be honest with you if they start to see worrying signs developing. They are likely to be the first to recognize the signs of a potential problem before it develops.
-Enlist family members and friends to help keep you grounded. They will be able to provide an ‘outsider’s’ perspective regarding your behavior.
-If you feel your self-control slipping, you need to stop trading until you feel you are more in control of the situation.
-Often the problem is made worse by excessive free time. If this is the case, find other activities to occupy your time. These should preferably be activities that will take you outside the environment where you will have access to your computer and/or internet access.
-If you suspect that you have a problem, you need to be honest with yourself and admit you need help. Admitting it is the first step on the road to recovery.
-Get addiction help if you realize that you are indeed addicted to trading. If you don’t it might just be a matter of time before you lose everything, including your family. Contact a counselor that specializes in addiction. I am unsure as to whether there are treatment groups that cater specifically to trading addiction; however, I believe that one that deals with gambling might suffice.
In order to resist addiction, you, as a trader will have to learn how to detach your emotions from trading. See it as you would any other business, because that is really what it is supposed to be. We should constantly monitor our susceptibility, as forex traders, for falling into addictive behavior. We tend to be passionate about trading, because it can be fulfilling in many ways. However, it might do us well to consider this question: Is there but a thin line between passion and addiction?
Till Next Time…Trade Confidently
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