Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

lrushing

The Addicted Day Trader

As a professional trader, are you addicted to trading?  

8 members have voted

  1. 1. As a professional trader, are you addicted to trading?

    • Yes
      4
    • No
      4


Recommended Posts

When we think of addictions we usually think of alcohol, drugs or gambling. We don’t normally think about people who are addicted to risk, adrenaline and money. The truth of the matter is that more and more day traders are becoming addicted to daily trading on the stock market in pursuit of the adrenaline rush they feel when they take big trading risks. Many of these people quickly find themselves addicted.

 

There are many people with addictive personalities and the majority of addicted day traders fall into this category. This type of personality puts them at risk for becoming emotionally and psychologically, in some cases even physically, addicted to certain things that have a certain level of risk associated with them. An addictive personality is defined, as a person who has a compulsion to behave in a manner that is detrimental to their best interest. In most cases this addiction not only affects them personally, but those people around them such as their family and friends. These addictions don’t have to be related to chemicals such as drugs and alcohol, but they can be addicted to their work and risk taking as well.

 

The addiction of the day trader was discussed in a story by CNN in July 1999. If you remember, this was a time when the Internet was very much a focus in society as more and more users were finding out the various opportunities that were available on the web. One of those opportunities was day trading online. The Internet made it convenient and accessible anywhere you had access to a computer. Many day traders were soon finding financial adventures and high risk taking was available on the web and so the addiction began.

 

The act of day trading can very much be an action packed, adrenaline rush event. You have the opportunity to make a lot of money or lose a lot of money and the prospects of both really get the adrenaline pumping for addicted individuals. Day traders with addictive personalities were quickly finding themselves hooked on day trading. In fact, gambling addiction hotlines were receiving more calls from addicted day traders than casino or sports gamblers. Agencies also began offering counseling services to these individuals and equated their compulsive trading to that of a compulsive gambler.

 

The main problem was that many traders found the Internet access to trading so convenient that they could do it without even really understanding what they were doing. This is still a common problem today. Traders are finding that these individuals are not able to detach themselves emotionally from trading. They become highly addicted to the Internet, they make bad or mediocre trades just for the “fix†of daily trading. Their day just isn’t complete without making their daily trade. They become addicted to the risks and adrenaline rushes of day trading and they have to get it on a daily basis. This leads many traders into spending more money than they have just so they can get that daily trading “fix.†According to psychologist Marvin Steinberg, director of the Connecticut Council on Problem Gambling states that the stock market “gives gamblers the quick fix and constant action they crave.â€Â

 

This leads to a wide range of problems for both the trader and their family. Several firms reported to CNN that two-thirds of all day trades were losing their investments within one month. They also found that nine out of ten were going broke in as little as ninety days. This can be financially devastating for the trader and their family, especially when traders would begin to resort to spending savings, college funds and even home equity. They destroy their family’s financial future just so they can make trades on a daily basis. These are the signs of a true addiction.

 

This addiction to risk has affected many people. They find themselves sitting in their homes, watching CNBC, and staring at their computers. Some addicted traders have even admitted that they had dabbled in drugs but nothing compares to the rush they feel when make trades on a daily basis. The adrenaline rushes cause extreme euphoria that causes them feel like they are on top of the world. Everything they make with their primary jobs, however, they tend to lose very quickly in the stock market.

 

There are two types of addicted traders. There is the problem trader and the compulsive trader. The problem trader will lose large sums of money but stop when the loss is too much or they are confronted by their spouse or family. The compulsive trader won’t stop there. The compulsive trader disregards the complaints by family members and continues looking for additional sources of income to keep their trading active. The Council on Compulsive Gambling of New Jersey states that approximately 10% of investors are problem traders, while 5% are compulsive traders. Both conditions are progressive and many people do not realize they have a problem until they are too late and in too deep.

 

When addicted day traders find themselves in too deep they are often ashamed of what they have done to themselves and their family. Many realize that they have destroyed their lives and they begin to look for ways out of it. Many investors will eat their losses and file for bankruptcy. Others will begin to contemplate suicide. These investors feel that they have no money left, no family and suicide is the last play they have. It is a downhill road for these individuals.

 

Irresponsible trading and addictive personalities are the main causes for these addicted traders. They don’t use the knowledge they may have learned from reading books or attending trading seminars. They don’t use the money management skills that they have. In fact, many traders are financial geniuses with Master’s degrees and Ph.D.s in finance. They have the knowledge to be successful day traders but they allow themselves to make bad decisions, poor choices and wager money beyond their means. The risk is greater and the adrenaline rush is higher. They find themselves too deep because they don’t get a rush off of a $1000 trade when they have already made $10,000 trades. The more they wager irresponsibly the more they lose and the quicker they find themselves losing in the day trading profession. Thus, the life of the addicted trader begins and it is only a losing battle between them and the stock market.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date: 29th March 2024. GBPUSD Analysis: The Pound Trades Higher But For How Long? The global Stocks Markets are closed due to Easter Friday (Good Friday). The NASDAQ continued to follow the sideways trend while other indices again rose. The SNP500 reaches an all-time high, but the NASDAQ remains under pressure from Tesla, Meta and Apple. The Euro continues to trade lower against all major currencies including the US Dollar, Euro and Japanese Yen. The British Pound is the best performing currency during this morning’s Asian session. However, investors are largely fixing their attention on this afternoon’s Core PCE Price Index. GBPUSD – The Pound Trades Higher but For How Long? The GBPUSD is slightly higher than the day’s open and is primary due to the Pound’s strong performance. At the moment, the British Pound is increasing in value against all major currencies. However, the US Dollar Index is also trading 0.10% higher and for this reason there is a slight conflict here. If investors wish to avoid this conflict, the EURUSD is a better option. This is because, the Euro depreciating against the whole currency market avoiding the “tug-of-war” scenario. The GBPUSD is trading slightly lower than the 2-month’s average price and is trading at 49.10 on the RSI. For this reason, the price of the exchange is at a “neutral” level and is signalling neither a buy nor a sell. The day’s price action and future signals are possibly likely to be triggered by this afternoon’s Core PCE Price Index. Analysts expect the Core PCE Price Index to read 0.3% which is slightly lower than the previous month but will result in the annual figure remaining at 2.85%. The PCE rate is different to the inflation rate and the Fed aims for a rate between 1.5% to 2.00%. Therefore, even if the annual rate remains at 2.85%, as analysts expect, it would be too high for the Fed. If the rate increases, even if only slightly, the US Dollar can again renew bullish momentum and the stock market can come under pressure. This includes the SNP500. Investors are focused on the publication of data on the UK’s gross domestic product (GDP) for the last quarter of 2023: the quarterly figures decreased by 0.3%, and 0.2% over the past 12-months. This confirms the state of a shallow recession and the need for stimulation. The data, combined with a cooling labor market and a steady decline in inflation, increase the likelihood that the Bank of England will soon begin interest rate cuts. In the latest meeting the Bank of England representatives did not see any members vote for a hike. USA500 – The SNP500 Rises to New Highs, But Cannot Hold Onto Gains! The price of the SNP500 rises to an all-time high, before correcting 0.33% and ending the day slightly lower than the open price. Nonetheless, the index performs better than the NASDAQ which came under pressure from Tesla, Meta and Apple which hold a higher weight compared to the SNP500. For the SNP500, these 3 stocks hold a weight of 9.25%, whereas the 3 stocks make up 14.63% of the NASDAQ. The SNP500 is also supported by ExxonMobil’s gains due to higher energy prices. The market will remain closed on Friday due to Easter. However, the market will reopen on Monday for the US and investors can expect high volatility. Investors will also need to take into consideration how the PCE Price Index and the changed value of the US Dollar is likely to affect the stock market next week. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Michalis Efthymiou Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • MT4 is good and will be good until their parent company keep updating the software, later mt4 users will have to switch to mt5.
    • $SOUN SoundHound AI stock at 5.91 support area , see https://stockconsultant.com/?SOUN
    • $ELEV Elevation Oncology stock bull flag breakout watch , see https://stockconsultant.com/?ELEV
    • $AVDX AvidXchange stock narrow range breakout watch above 13.32 , see https://stockconsultant.com/?AVDX
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.