Are You Addicted to Trading?

07/09/2014 9:00 am EST

Focus: FOREX

In this article, the staff at FXTM addresses the dangers of forex trading addiction and explain the importance of staying in control of your trading.

As all experienced forex traders will tell you, maintaining discipline when trading is one of the keys to success. However, one of the biggest problems with this is that some people become addicted to trading. Just like being an alcoholic or a gambler who is out of control, trading can become something that some traders just cannot do without. As a result, they lack the patience to look for good trading opportunities, and, instead, have to jump into the market just to get their daily fix.

Addiction is not just a "state of mind"-it brings about physical changes in the brain that make it difficult-and sometimes impossible-to resist the urge. When people start to become addicted, they generate chemicals in the brain which are very similar to synthetic opiate drugs-such as morphine and heroin-as well as other naturally occurring chemicals such as endorphins. All of these are addictive compounds that act on certain areas of the brain to create uncontrollable cravings.

It's also important to understand that there is a large genetic component to addiction. So, if other members of your family have addiction problems such as alcoholism or drug abuse, it is far more likely that you will become addicted as well. Just because you have never suffered from what is viewed as a traditional addiction doesn't mean that you are immune. You need to be vigilant at all times and ask yourself whether or not what you are doing when you are trading is rational-or if you may be showing the early signs of a serious problem.

One of the warning signs is when your overriding goal in the market is to make money at all costs. When you do this, what you are doing is-essentially-gambling. Unless you are able to follow a well-defined plan and stick to it-including accepting both wins and losses dispassionately-there is a good chance that you are starting down the road to addiction. This is even more likely if you find yourself getting an adrenaline rush from the occasional big win. This creates positive reinforcement of your behavior and speeds up the addiction process.

The disciplined and successful trader obviously enjoys wins, but what they take the most pleasure in is maintaining a structured approach to the market with well-defined rules that they follow no matter what they may be feeling. Trading should be about taking pride in control and mastering your emotions, not giving into them. Ask yourself how you would feel if you could not trade-and if the answer is that you wouldn't know what to do, then take a step back and ask yourself whether you have a problem. This is exactly the same behavior that alcoholics exhibit-life wouldn't be worth living if they couldn't have a drink. In the case of trading, this leads to a need to trade even when the market conditions aren't right-which is a perfect recipe for financial and personal disaster.

By the Staff at FXTM

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