When you are involved in trading, you have to keep a tight watch on yourself because there is a very big difference between being a methodical professional trader who works hard and applies sensible rules to everything that he does and a gambler who is addicted to trading for the thrill as much as for the money. The difference between the trader and the addict is that one makes rational decisions and the other highly emotional ones.
Everyone wants to make money but the way in which you go about it differentiates the investor from the addict. If someone is addicted to trading they will tend to be so concentrated on making money fast that they will make very costly and misguided decisions. The addict only thinks short term, usually risking money that he really shouldn’t be playing with whereas the shrewd investor will only trade with disposable income.
For the addicted trader, a big success puts him on a high – a big adrenaline rush. Any addict – drink, drugs, gambling – knows that one high is never enough because the addictive mind craves more and more. Whatever the addiction the pattern is the same.
Another common feature to all forms of addiction is the time that it takes up. Drug addicts waiting for a fix, drinkers waiting for a bar to open and then staying put…and with the trading addiction, the fact that trading is online means that it is oh so easy to get going from the first minute you wake up in the morning. That makes it easy to work but very dangerous for someone with an addictive personality who might be tempted to spend the best part of the day in front of his computer screen. The temptation to keep on trading whatever is almost certainly likely to end up with a great deal of revenge trading and the loss of a great deal of money.
Addicts focus on their obsessions and the trading addict will be looking up on the state of their investments at every possible moment.
And of course today’s technology feeds the obsession when someone can check on his investments at any hour day or night. Someone who is anxious when he hasn’t got a way to check up on his portfolio looks like an addict and is a suitable case for treatment.
The other end of the behavioural spectrum from the addict who is seen continually checking where he stands is the secretive approach, trying to kid his family and friends that he is not sneaking around to spend more time in front of his computer. It is hard for a trading addict to maintain relationships in a normal way – you can imagine the difficulty that a wife and children will have in coping with someone whose mind is totally focused on the state of his investments and the movements in the market.
Addicts are unhappy people caught up in their own obsession. Someone who launches into a trading career has to resolve that life has more in it than dollars and euros.