澳洲幸运5官方开奖结果体彩网

The Downward Spiral of Trading Addiction

Part of the Series
Behavioral Finance

Trading in the financial markets is stimulating, exciting, and engrossing. But you can become addicted, just like with actual casino gambling or with the use of illicit drugs. Like any severe addiction, trading addiction can cost you soc𝄹ially and economically.

In this article, we explore what causes trading addiction, the symptoms💟, and how to break out of the downward spiral. The problem focuses on the brain and understanding how its reward systems can train you to trade compulsively and dangerously.

Key Takeaways

  • Trading comes with a promise of high income, financial freedom, frenetic pace, highs, and lows, and can become an addiction for some people, just like alcohol or gambling.
  • While average investors may luck out and strike it rich, most people end up losing money and if the addiction takes over their lives, can lose jobs, relationships, and even their homes.
  • In a classic downward spiral, an amateur may experience beginner's luck, then lose, then try to recover their losses, but instead lose more as they keep digging themselves out of a deepening hole.
  • Once you realize that you have a serious problem, trying to pull yourself out of your addiction alone is a recipe for disaster; instead, reach out to family and friends and get professional help.

The Temptations of Trading

You can make a lot of money from trading and you can do it more or less on your own whenever you like. Trading doesn't come with a boss or being embedded in a company—both of which may drive you around the bend. There are lots of ways to make money by trading, irrespective of whether markets rise, fall, or stagnate. Also, you can do it fast, thanks to 澳洲幸运5官方开奖结果体彩网:leveraging.

In theory, 澳洲幸运5官方开奖结果体彩网:you could become finan🍬cially🐟 independent, which is a dream that tempts many 9-to-5ers. But this dream of fast cars and luxury is statistically likely to remain just that. Past research has shown that up to 90% of amateurs lose money in the markets.

The fundamental problem is that this is a risky, 澳洲幸运5官方开奖结果体彩网:speculative business, and the leveraging g𒁃oes down just as fast and as much a🍌s it goes upward. If it goes sour on you, you can lose your proverbial shirt and a whole lot more.

Fast Fact

Trad♐ing, like gambling, holds the promise of great financial rewards. But with those rewards also come great risks, something many investors tend to ꦉdownplay.

The Classic Downward Spiral

All of the above create a🍨n environment that can lead to addiction, and some behavioral patterns can easily induce a self-perpetuating disaster.

First, if things go well, people think they know what they are doing and bet more on their efforts to make a fortune, retire, and move to the beach. However, if these initial successes were just beginner's luck, which is common, they will probably soon turn into horrendous losses.

The next psychological trap isꦕ to try and win back the losses, which tends to entail progressively risky and ill-fated punts and a journey into the pits of despair.

Warning

Signs of addiction include blowing through your financial resources, falling into debt, neglecting your job, family, and friends, losing sleep, and otherwise failing to tend to your health and wellbeing.

A True Addiction

The scenario where a trader attempts to recoup losses by trading more may not i🐷nitially be a sign of true addiction. But, addi🤡ction can eventually develop for both mental and physical reasons. Trading can give you a kick and a rush, and blot out reality—just like illicit drugs.

If there is an innate psychological tendency toward compulsion and addiction, the initially harmless and cheap thrills can turn into an obsessive desire to repeat and prolong the pleasure. However, just as heroin addicts reputedly chase unsuccessfully after the incredible high of the fi♛rst time, the same can be said about people addicted to trading.

A small part of the brain called the nucleus acumens is respon🔯sible for evaluating and reacting to our experiences. It is the pleasure center that responds to all sorts of things, including good food, chocolate, alcohol, sex, and money.

The brain actually produces an opium-like substance called dopamine that rewards the brain's pleasure centers. Dopamine reinforces a kind of training process by your owꦉn brain. You get rewarded for certain activities, so you learn to do them passionately. It is therefore hard to reꦇtrain and go into reverse, even if your life and financial solvency depend on it.

Important

Like any addiction, if the thing you are fixated on (in this case, trading) has essent🥀ially taken over your life, it is crucial to acknowledge the problem and seek help.

Signs of Trading Addiction

Some tell-tale symptoms should alert you, your family, or your friends to a very real problem and danger. The෴ table below highlights some of the key signs that you may have a ꦕproblem.

Signs You May Be Addicted to Trading
Taking bigger risks Trading becomes more risky as you seek greater returns despite the potential for losses
Obsessing  Trading, researching, watching the markets, and reviewing your holdings become obsessive 
Losing interest  Giving up activities that you once enjoyed for trading
Seeking adrenaline rush Deriving pleasure from your trading activities
Inability to break Trying to give up trading is unsuccessful
Experiencing urges Giving in to your urges and compulsion to trade
Feeling stressed Experiencing anxiety and other, similar emotions when you aren't trading
Lying and hiding Making excuses and keeping secrets from those close to you
Looking for capital Finding ways to fund your trading activities through stealing, borrowing, or using your savings
Ignoring the consequences Trading even when things go south, including failed relationships, loss of capital, and changes in
Source: Family Addiction Specialist

If you spend far too much of your free time trading—neglecting family, friends, and a full-time job, as a consequence—you should recognize that a problem possibly exists. Similarly, if not only your life seems to revolve around trading, but you are putting more and more m🅷oney into the process, disaster may be just around the corner.

Feelings of general frustration, aggression, and attempts to suppress other personal problems are other signs. In the worst cases, neglecting personal hygiene and physical health are also evident. And if you're borrowing money from friends or using one credit card to pay off another𒊎, it's a strong indicator that a problem mo🌳st likely is present.

Tip

If you or someone you know has a gambling problem, call the National Problem Gambling Helpline at 1-800-522-4700, or visit NCPGambling.org/Chat to chat with a helpline specialist.

How to Become "Clean" Again

If you have symptoms of trading addiction, you need to take action. If you are really addicted, you probably cannot go it alone or you will likely end up back-trading yourself deeper intꦺo debt and despair. Addiction and counseling centers know all about this and are trained to help you retrain your brain.๊

Be open with family and friends, and seek out their support. In any event, the trading addiction may not be the real problem, so you may need to figure out what really underlies the gambling. Be🍰ar in mind that every addict has a different and uniq🎉ue story.

Even if you think you don't really have a problem and could stop anytime, be aware that the danger signs do not lie. If the signs are prominent, you are probably in real danger.

How Can Trading Be an Addiction?

Trading can ♏be exciting, stimulating, emotional, and engrossing. All of this can induce reward pathways in the brain. When a day trader makes a profit or even gets excited about a potential one, the brain releases so-called feel-good neurochemicals, such as dopamine and serotonin. This can cause you to become addicted, just like with casino gambling or using illicit drugs.

How Dangerous Is a Trading Addiction?

Like any severe addiction, trading addiction can be life-changing. In fact, it can have negative consequences, costing you your savings, job, personal rela🐼tionships, financial resources, and possibly many other things.

How Can I Get Rid of a Trading Addiction?

Being objective about your trading strategy and not letting emotions get in the way is a good start. If you cannot help yourself, you may want to try handing your investments over to a professional money manager (e.g. via mutual funds) or a 澳洲幸运5官方开奖结果体彩网:roboadvisor. Passive index investing is another way to keep your hands off the trading platform. If𓆉 you still feel♊ the lure, you may want to seek professional help for this addiction.

The Bottom Line

If you are addicted to trading or could be, you must find a way out of this perilous situation. If you trade sensibly and prudently, that is fine, but make sure you monitor your activities and keep things under control. Whatever the case, ge🐲t proper training and do it professionally.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Barber, B. M., Y. T. Lee, Y. J. Liu, and T. Odean. "Just how much do individual investors lose by trading?" The Review of Financial Studies, vol. 22, no. 2, 2009, pp. 609-632.

  2. Cox, R., A. Kamolsareeratana and R. Kouwenberg. "Compulsive gambling in the financial markets: Evidence from two investor surveys." Journal of Banking & Finance, vol. 111, no. 2, 2009, p. 11.

  3. BrainFacts.org. "."

  4. American Psychiatric Association. ""

  5. National Council on Problem Gambling. "."

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