Are You A Compulsive Trader?
We love trading. We wouldn’t be here otherwise, reading others’ thoughts on it and writing our own. One sometimes overlooked fact is that for some of us or our fellow traders, maybe it’s not just a pastime, and maybe it’s not a passion that they can put down and wait on for 5 years if they aren’t financially prepared to pursue it just yet.
Maybe instead it’s something they can’t resist doing. I think for all of us who are human (and yes, I know some of you guys and gals are pure tradin’ machines!), many of these types of thoughts and feelings appear from time to time, or ride along under the surface chronically during our trading.
This is a great time of year to explore this subject. Trading has all the necessary ingredients to become an addiction, and can sneak up, take over and destroy our lives just as easily as can alcohol or various other substances or habits. The most similar addiction is the addiction to gambling, so I’ve used some gambling references for this post. Let’s get started:
TWENTY QUESTIONS
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Did you ever lose time from work or school due to trading?
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Has trading ever made your home life unhappy?
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Did trading affect your reputation?
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Have you ever felt remorse after trading?
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Did you ever trade to get money with which to pay debts or otherwise solve financial difficulties?
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Did trading cause a decrease in your ambition or efficiency?
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After losing did you feel you must return as soon as possible and win back your losses?
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After a win did you have a strong urge to return and win more?
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Did you often trade until your last dollar was gone?
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Did you ever borrow to finance your trading?
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Have you ever sold anything to finance trading?
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Were you reluctant to use “trading money” for normal expenditures?
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Did trading make you careless of the welfare of yourself or your family?
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Did you ever trade longer than you had planned?
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Have you ever traded to escape worry or trouble?
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Have you ever committed, or considered committing, an illegal act to finance trading?
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Did trading cause you to have difficulty in sleeping?
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Do arguments, disappointments or frustrations create within you an urge to trade?
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Did you ever have an urge to celebrate any good fortune by trading?
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Have you ever considered self destruction or suicide as a result of your trading?
Most compulsive traders will answer yes to at least seven of these questions.
(Paraphrased from the Gambler’s Anonymous 20 Questions)
And now, a paraphrase of the Custer Three Phase Model of gambling addiction:
Robert L. Custer, M.D., identified the progression of gambling addiction as including three phases:
- the winning phase
- the losing phase
- and the desperation phase.
During the winning phase, traders experience a big win or a series of wins that leaves them with unreasonable optimism that their winning will continue. This leads them to feel great excitement when trading, and they begin increasing the amounts of their bets.
During the losing phase, the traders often begin bragging about wins they have had, think more about trading and borrow money legally or illegally. They start lying to family and friends and become more irritable, restless and withdrawn. Their home life becomes more unhappy, and they are unable to pay off debts. The traders begin to “chase” their losses, believing they must return as soon as possible to win back their losses.
During the desperation phase, there is a marked increase in the time spent trading. This is accompanied by remorse, blaming others and alienating family and friends. [The trader] may experience hopelessness, suicidal thoughts and attempts, arrests, divorce, alcohol and/or other drug abuse, or an emotional breakdown.
I doubt there’s anyone for whom some of the above doesn’t hit pretty close to home. If it sounds less like familiar feelings and more like the story of your life, there are many places to begin to explore what’s going on and how to begin the process of change. One online example is Your First Step to Change from the Massachusetts Council on Compulsive Gambling. There are also various 12-step group programs and such, but traders often tend to be somewhat group-averse, so don’t feel like that’s the only source of help.
And of course, there’s always this.
Lloyd said,
December 20, 2006 @ 8:43 am
Man I could answer yes to so many, even though I haven’t placed a single trade in the past three trading days for one reason or another. I just can’t imagine someone who has more than seven. I hit like 5 and was worried, no it wasn’t the committing and illegal act one. I’ve got to save this one and look it over every few months just in case.
Paadiddy said,
December 20, 2006 @ 5:23 pm
I could answer YES to many in the past, but I have gotten better and better in the last 3 yrs!! Experience counts a lot in trading. I am so confident now in my trading that I post all my trades LIVE as I take them: http://lauristonletter.blogspot.com/
Good luck!