What I love most about trading is that it exercises the brain and the will. It involves ongoing analysis and problem solving, and it requires the steady development of performance-based skills. I'm sure serious players of chess and poker enjoy similar benefits. Talk to any successful athlete and you'll find someone who has cultivated themselves, not just their bodies.
There are times, however, when trading becomes a vehicle for destroying mind and soul. You won't hear brokerage firms, trading publications, or seminar producers talking much about this problem, because their common aim is to keep the public trading and buying trading-related products. But, as someone who has worked with many independent traders and traders at firms, I've seen this problem far too often: trading becomes an addictive activity.
Oh yes, trading coaches and psychologists will talk about losing "discipline", but rarely will they use the "A" word. Discipline you work on, addictions you get rid of. If you get rid of a trading addiction, there goes the trading coach.
Many times, however, losses of discipline in the markets are related to addictive patterns of behavior.
An addiction occurs when an activity provides a strong source of stimulation that, over time, a person becomes psychologically and sometimes physically dependent upon. We generally label a behavior as an addiction when people seek out the activity even in the face of demonstrable negative consequences. It is the inability to stop the activity when those consequences interfere with life that marks any addiction.
Let's look at the facts:
* According to research cited by the National Council on Problem Gambling, 2 million adults (1% of the population) meet the diagnostic criteria for pathological gambling. Another 4-8 million adults (2-4% of the population) can be considered problem gamblers who are experiencing direct problems as a consequence of gambling.
* Research in psychology and psychiatry reported in the Oxford Textbook of Psychopathology finds that between 14 and 16 million Americans meet diagnostic criteria for alcohol abuse or dependence. Between 4-6 million Americans are dependent upon illegal drugs.
* Rates of substance abuse among men ages 18-44 are double those of the general population.
* A family history of addictive problems is one of the best predictors of risk for addiction. Peer influence is another significant risk factor.
* According to a research review in the Oxford Textbook, rates of depression are significantly higher among people with addictions than in the general population, with indications that people are using the addictive activities to medicate themselves for the pain of depression.
* Addictions are also most common among individuals with attention deficits and hyperactivity problems and appear to be related to sensation-seeking among those needing stimulation.
Even if we assume that traders do not have more frequent addictive behaviors than the general population, the statistics tell us that, in all likelihood, nearly one trader in every ten has a diagnosable addictive problem.
For the trader with attention deficits who cannot tolerate boredom or lack of stimulation, trading provides action.
For the trader who is depressed, trading can provide an escape from the self and a sense of immediate gratification.
Such traders need to trade and keep trading when they have no edge whatsoever.
They lose their money, generate failure experiences for themselves, and create hardships for their families.
For them, it's not about "discipline" and following trading rules. It's about getting their lives back. And getting the right kind of help. If you see any aspect of yourself in this portrait, do the right thing. For you, and also for those who love you. Trading should expand your control and self-mastery, not become an instrument for its destruction.
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6 comments:
Excellent thoughts as usual. As I observe fellow traders and myself I wonder when at what point trading becomes an addiction. Can the trader recognise his own addiction before . Experts say you have to enjoy trading to become successful . Is enjoying trading an addiction? . Can we say that great actors, sportsman are not addicted in a way
Excellent, timely, and much needed observation. As a ER physician, I see the substance abuse problems constantly. But I would've liked to see you mention something about confronting and admitting the problem aka the AA approach. Acknowledging an addictive problem is the first, and necessary step to recovery. Nevertheless, you are only one of a few "in the industry" who has been willing to bring this vexing subject up and I applaud you for that.
/bruce Hong, MD
Hi Trader Dhananjhay,
You raise excellent questions. I do think there's a difference between wanting to trade and enjoying trading and *needing* to trade. Great athletes, such as boxers, for example, can be very patient and wait for their opportunity. Same with great chess players. But if there is a *need* for action, the trader cannot be patient and inevitably trades whether or not opportunity is present.
I would also argue that addicted traders don't truly enjoy trading. They get a sense of thrill from action and risk and, over time, need more and more action and risk to get the "high".
Ultimately it boils down to self control and consequences. When a trader can't stop trading even when the trading is bringing many negative consequences, that's a sure sign of a problem.
Thanks for your excellent observations.
Brett
Hello Bruce,
You are absolutely correct. The ER physician is on the front lines of many psychiatric disorders. Because substance abuse is associated with many negative health outcomes--from auto accidents to liver disease--it is often first encountered by the primary care or ER physician. Nineteen years of teaching in a med school gave me the greatest of admiration for emergency room physicians and staffs.
You've raised an important issue regarding how one confronts an addictive problem. Simple will power is not enough to effect change in most cases. Accordingly, I will make that topic my next blog article. Thanks so much for the comment and the idea.
Brett
All your posts are thoughtful, clearly written, and excellent, but this one is exceptionally so.
In my early years of trading, my latent addictive personality surfaced. Eventually, I identified the addictive behavior in the form of gremlins, naming them by name, and in that way, my approach was similar to what is used at AAA, which is to recognize and state that you are an addict. I also needed to stop trading for three months, just like how an alcoholic needs to stop buying alcohol, stop going to bars, and stop hanging out with drinking partners.
I also at that time, read some books written for addicts, how to recover from addiction. The principles are universal for recovery, regardless of the particular kind of addiction. Some addicts are serial ones--they hop from one addiction to another, all their lives--it is one of the most vicious of all vicious circles.
That's a great post Michelle; thanks so much for sharing your experience and your insight about what it takes to deal with an addictive pattern. My next blog post will be on that very topic. Your point about addictions being interchangable is very, very true. It's easy to move from one (such as drinking or gambling) to another (such as trading). Best of luck in your development as a trader, and thanks for your great posts on the Trader Mike blog (www.tradermike.net).
Brett
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