All traders have gambled here or there, but not all traders are gamblers. There is a thin line between the “hidden illness” and undisciplined trading.
Gambling, that in the past was considered a type of Impulse-Control Disorder, nowadays is classified as a Non-Substance-Related Disorder, which means it is conceptualized more as an addictive behavior.
Even when they know the odds are against them, gamblers can’t “stay off the bet.” For traders this means trading without an edge, trade oversize, do not have or do not follow a trading plan.
We all have gambled in one occasion or another, in life or in trading, but it is the persistent and recurrent maladaptive behavior that should rise a red flag.
Here are some distinctive traits of traders that have addictive behavior:
- Preoccupation: The person is constantly preoccupied with trading and has frequent thoughts about how to get money with which to refund his or her account.
- Tolerance: Similar to drug tolerance, the trader needs to bet with increasing amounts of money or with higher leverage in order to achieve the desired feeling.
- Loss of Control: The trader has made repeated unsuccessful efforts to make a trading plan and follow it.
- Withdrawal: The person is restless or irritable when attempting to stop trading.
- Escape: The person trades as a way of escaping from problems or of relieving guilt, anxiety, depression, etc. This is is a common trait between intraday (day) traders.
- Chasing: After get stopped out from a position, the trader often returns in the market to “get back from the market” what the “market took back from him”.
- Lying: He or her lies to friends and family about the extent of his involvement in the markets.
- Risked Relationships: The person has jeopardized or lost a significant relationship, job, or educational or career opportunity because of his or her obsession with trading.
- Bailout: Relies on others, such as friends, to provide money to relieve a desperate financial situation caused by his trading problem.
Gambling is a vicious cycle in which several thousands of people every year commit financial suicide.
If you think you may suffer from this quite common disorder, keep trading with such psychological issues puts you further and further in the hole. Take a hard look at how trading is affecting your life. It’s not a sign of weakness to ask for help. It’s never too late to make changes for the better.
Do you recognize yourself in one or more of the habits listed above? If yes, how many? Do you have troubles or difficult when you talk about them with others?