Real addictions are a problematic issue, and although trading doesn’t require the consumption of any drugs, some think that the trading industry is addictive. The intense emotional rushes the majority of traders experience before putting a trade-in and during a massive win or a significant loss are a well-known element of trading; however, are traders getting dependent on trading?
Is there any need to assist traders, or is it a case that most traders lose money due to their being in the learning process and experiencing the loss as an aspect of “paying your dues”? In this article, we will look into the issue and decide if there’s enough evidence to back the notion that trading is addictive.
What is an actual addiction? There are two types of addictions: physical dependency and mental dependence. There’s a lot of information about both and definitely beyond the topic of this article, but a summary is provided.
The definition of “addiction” includes
“Psychological addiction, as opposed to physiological addiction, is a person’s need to use a drug or engage in a behavior despite the harm caused [emphasis added] – out of a It becomes associated with the release of pleasure-inducing endorphins, and a cycle similar to physiological addiction is started…. it becomes associated with the release of pleasure-inducing endorphins, and a cycle similar to physiological addiction is started.pleasure-inducing endorphins, and a cycle is started that is similar to physiological addiction. This cycle is often complicated to break.”
“Psychological addiction doesn’t have to be limited to drugs; in fact, a variety of behaviors and patterns [emphasis on added] can be considered addictions if they pose a risk to others. ….”
To constantly or passionately dedicate or surrender (oneself) to anything
The definition of addiction is defined as someone who feels the “need” to repeatedly engage in a particular behavior to satisfy the emotional results it produces and the emotions generated. It’s a desire they rationalized as a need, and they have given up control and allowed the behavior to grow into a routine.
This is a physiological process exacerbated by the release of endorphins in the body that create the sensation of physical pleasure. Let’s look at the fundamental actions (behaviors) in trading to earn regular profits. Also, consider certain behaviors displayed by a lot of traders, and see whether they are in line with the criteria above.
One of the most important practices to make trading profitable is good risk management. The most important thing is to ensure that your risks are calculated and measured. You should limit your losses when they happen and keep them to a minimum as much as possible (such as not engaging in poor trades).
The most commonly used tools to manage potential losses include risk/reward calculations and stop-loss requests. Risk/reward calculations are essential for each transaction so that you can determine if the work is a good business choice. Stops are utilized to ensure you can make a good trade, but the market does not exactly what you want. Risk management is vital with trading leverage, which can work to your advantage or against your gift.
General money management is a critical practice to ensure that your business’s trading can remain open in the months and years to come. It is a form of risk management. However, the emphasis is on a greater dimension and a more excellent range of analysis, like taking note of the percent of your capital put into each trade regardless of the particulars of the particular transaction.
These methods can appeal to the brain; however, how they feel is why traders are in danger. There are many common errors frequently made by traders, resulting in huge losses, lost profits, and even ruin for many.
These errors are against the generally accepted and well-known best techniques for consistently profitable trading, yet they are committed repeatedly with the same trading professionals. Because they are often repeated, it is plausible to conclude that they’ve developed into habits. We can look at these habits in terms of the person’s emotional reaction.
A trade that is not planned is often referred to as making a trade with no exit strategy for the business. The person who is doing this typically isn’t following a technical analysis system and is more dependent on their intuitions than solid calculations.
This could indicate that they allow their feelings to drive their decisions more than their logic and reasoning. If the market moves in their favor, this reinforces their decision to trust their instincts and feeds their ego with the satisfaction of believing they are right.
Another crucial aspect is suspense. If the deal is scheduled and there aren’t any surprises, it takes the tension out. What makes people want to read an intriguing mystery novel or film? They enjoy sitting in their seats, enjoying the stress of the story. When you know the story’s conclusion, it removes all the excitement. And who would want to do that?
Refusal to utilize stops. Typically, brokers’ most frequently heard comment is, “No, I don’t want to get stopped out. I’ll watch it.” This is the case for first stops, and more often, trailing stops following the market have shifted to one’s advantage. The trader puts much energy into their feelings of hope and expectation.
The ego is also fed by this, “knowing” that the market will perform what they want. When the market moves their way, they feel considerable satisfaction and the affirmation they seek to be an expert trader than they are. If the market goes against them, their sentiments are amplified, resulting in a stronger desire to be acknowledged. Also, this creates some tension and excitement.
The frequency of trading is a cause for over-trading. A.K.A. trading too frequently. In this scenario, traders feel the desire to feel satisfied with their perception of being insufficient. Perhaps they’ve just suffered several losses or a significant loss and are now convinced that they must recoup their losses and be able to forgive them of any previous mistakes. They feel bad about themselves, and instead of following the path they believe is correct, they desire to have their bad feelings disappear.
They are placing trades that are too big for your account. One of the fascinating aspects of this error is that, in addition to the emotion of greed, people feel a little excitement when they break the rules, particularly going outside of their comfortable areas.
It’s a simple act of rebellion or being adventurous that people experienced when they first started trading, and why it’s unlike anything they’d previously done. The new frontier is appealing, and breaking beyond the conventional rules and norms is a great feeling of satisfaction. Of course, the desire for money is evident here too.
You only have to risk two percent of your money. The possibility of losing only a few hundred dollars cannot match up to the massive numbers that one would like to see when trading or the numbers frequently seen in advertisements for the different trading systems available. If you’re making only 800 dollars on this trade, you look at a report claiming, “I made $9,700 on my first three trades! ” The decent profit does not feel very satisfying.
A point worth mentioning at this point and directly relates to the topic at hand is the fact that humans do make mistakes. The only time they repeat mistakes is when they encounter the possibility of a problem. When you rise out of bed in the morning and knock your toe into the headboard of your bed, you won’t sit there and continue to smack your toe repeatedly.
It would stop unless there were enough other reactions to force you to continue to do it until your toe was completely damaged. You’d only break your thumb when you hammer the nail once and then alter how you held the board unless you knew something was wrong.
In comparing the recurrent trading errors with the established acceptable practices, it’s the emotional reactions of the committed mistakes. Insanity, personal absolution, satisfaction, vitality, feeding the ego, feeling the right choice. They can be mighty and provide enough stimulation for the person to go against their judgment.
The actions involved in the set of two are in stark contradiction concerning the financial outcomes and how they appear to the trader. Understanding the results of an individual trade and keeping the risk to a minimum, and focusing on managing your money effectively are boring and do not provide any excitement. Without surprise, and by a knowledgeable, professional trading is a less emotional proof of a trader’s capacity on an emotional level. If you’re good and confident and consistently produce results, those results don’t warrant a massive celebration. If you’re starting and you succeed, you’ll find it more satisfying, mainly when you score a huge one. It’s an enormous ego boost.
There is an inverse correlation between the discipline needed for suitable trading and the emotional aspects involved in unsafe trading. The field itself goes around the pleasant emotions and restricts them to the trader. This is among the main reasons why so many traders struggle with the emotional aspect of trading. It’s because of the way they trade.
They trade in a way that feeds their emotions and establishes terrible habits, both the emotional and active ones. If they could concentrate on developing healthy trading patterns and practice following the accepted wisdom, watch themselves in their trading, and do the basic things they’re supposed to do, their feelings would not be triggered so quickly.
Trading by itself is not addictive. Many traders can trade safely and are happy with the lifestyle that comes with it. There are elements of trading that create the conditions for an individual to fall into a habit of trading recklessly. This isn’t just in the act of trading. The mindset of the person and the practices they develop at the beginning of their trading determine the likelihood that they will become dependent and end up suffering.
It is the person’s responsibility to know their actions and behavior to protect against the risk of becoming addicted to trading that isn’t good for them. Training, support, and guidance is the most effective option for traders, and they should be taken whenever possible. The longer that the old habits remain, the more time it will take to change them and establish proper trading methods.