How Addiction In Trading Leads To Disastrous Results

When it comes to food, drugs, gambling or alcohol, addiction is easy to spot. Maybe! When it comes to trading, there are addictions that may go unnoticed, creating disastrous results. Here are some ways you may be addicted in unhealthy, unproductive and destructive habits.

Addicted to Waiting

You are waiting for the kids to move out, move back in, tax season, end of tax season, Christmas, completing the house renovations, interest rates to fall, interest rates to rise, your job promotion BEFORE you start trading or before you start trading SERIOUSLY.

Addicted to Trading

You spend hours in front of the screen watching bars, angles, taking tens of trades in a day. You are sure the next one is going to be a winner. You do not follow a system consistently. You rely on the transient information that streams down your screen or a news bulletin that pops here and there.

Addicted to Losing

You have a pattern of self-sabotage. When you are ahead, you feel edgy. You feel uncomfortable and uneasy. You decide this is a lucky streak, you take bigger trades ignoring your position sizing rules (if you have any).

Addicted to Anger

You get angry at the markets, the broker, the software, the government, the politicians, the world economy, your family, your neighbours, your brokerage amounts, your computer, your math skills, your math teacher, your siblings, your mentors, your study materials, your indicators. You are trying so hard, but you’re getting nowhere. You stew in anger, frustration, resentment and bitterness.

Addicted to Blame

You blame anything and everything that comes your way: garbage truck that wakes you up early in the morning, the neighbours who party and distract you late at night, your Internet connection, your printer, technical support, how much you have to pay for live data, emails, forums, advisors and anyone that gets in your way. If only the world would cooperate, you would be rich (and famous).

Addicted to Intellectualising

You need to understand everything in great detail before you can use it or trust it. Markets go sideways, you have to understand why. Markets become volatile. Why? What is behind it? Markets start trending. Why is this happening? What is the cause? Even when you get an answer, you spit out another- much like the incessant child who never stops questioning everything. You are never satisfied with the answers. You search and search. You will trade when you have ALL the answers.

Addicted to Certainty

You need to be certain that this will be a top or a bottom before you trade. Your trading plan, if you have one, is three volumes totalling six hundred pages. A whole range of indicators and studies have to align before you can trust your signals. And then you add another five or ten to make sure. Is the trend going to continue? I need to be certain, you say. What is the point of trading if there is no certainty? There is always a “What if” looming around the corner. You keep piling information and data but are unable to come to any conclusion.

Addicted to Analysis

You study, you learn you analyse, you back test, and you study, learn, analyse, back test. You decide to break the market into sections of different characteristics. You aim to find appropriate strategies for each segment. You analyse with gusto. You apply multitude of trading approaches. You have two or more trading analysis softwares. You are like the doctor who keeps ordering more tests, X-Rays, MRIs but cannot diagnose or treat their patient.

Addicted to Distraction

Other things always take priority over your trading. You have to clean the desk, do the shopping, cooking, cleaning, take the dog for a walk and plan your holiday. Take kids to school, pick up kids from school, take them to sports activities, dancing, art classes. You defragment your computer, back up your charts, wipe clean your screens. You upgrade your software and your computer. You replenish the toner and the ink in your printers. You make some tea, go out for coffee, bake a cake and build a cubby house in the garden for your kids. You plant flowers, cut trees, mow the lawn. You buy notebooks, stationery, laminators and coloured highlighters. You put up charts, pull them down, rearrange your trading room and rearrange it again. You buy a new desk lamp.

Addicted to Excitement

Every time there is something new (software, indicator, study, book, DVD), you get excited. Every time there is important news, you get excited. When the market volatility increases, adrenalin keeps pumping through your veins. You dream of increasing your position size thirty-fold. You do it when you can. You tell everyone you know what gold, oil, bonds and currencies are about to do.

Addicted to Self-Sabotage

You find ways of getting in your own way. You forget to place stops. You ignore signals in your favour or against you. You use trading methods that are not tested. People tell you untruths repeatedly and you continue believing them. You say one thing but do another. You make promises that you will do better, that you will have more discipline, you will start this program or that one, but you never keep your word (to yourself).

Addicted to Emotional Highs and Lows

You like the attention you get from others when you are down and experiencing a losing streak.  You get sympathy, care and love. You eventually come out of it to show those around you that you can be bright and bubbly. Next thing, you are crashing again. You get comforted by family, friends, and colleagues who keep assuring you that you will be OK, you will do OK.

Addicted to Denial

You do not have a problem. Others do. Even if family, friends and colleagues tell you that you need to look at your behaviour, you are sure that they are wrong. They are the ones with the problems, you are OK.

We all have some of this

These patterns show up in a trader’s life in varying degrees. You play out of what is stored in your subconscious mind from our past experiences. William Glasser MD, in his book Positive Addictions, says: “Very few of us realise how much we choose the misery in our lives.  Even when we do, we still go ahead with the disastrous choice because we are convinced that we don’t have the strength to choose better.”

Way Out

There is a way out of the vicious cycle. You choose who you are, mostly unconsciously. You can choose to be different. It is important to recognise what is going on.  Here are the steps of the addiction cycle:


The stresses of life and trading begin to build so you start your addictive pattern. You feel good because the stress is relieved and you are distracted from the underlying issue.  You have, anesthetized yourself.


But you feel awful because you have just done something you know (deep down) is not good for you. So, you beat yourself up.


You see what happened.  It will never happen again.  You have a program and a solution.  You’ve got it right this time.  You are going to do better; in fact you will be perfect.


And then the stress begins to build again.  You miss your addiction, your distraction.  You miss the temporary high it gives you.  You miss the relief.  You stop thinking straight.  Your focus narrows.  If you do it one more time, just this once.  Please, please, PLEASE.


You make all the excuses to drop your program, your plan.  You come up with excuses (all of which are irrational) to make an exception.  You have been doing so good.  One exception won’t hurt. Look, today was an especially hard day.  You’ve got to have a break.  Maybe, instead of completely giving up that behaviour, you can do it once in a while. NOW is one of those “once in a while” moments. You have been in control, no harm in letting go here and there. You have successfully stuck to your plan for three weeks, you can do it again any time. One exception won’t hurt. You don’t really have a problem. You can get back to your discipline and plan any time.


The stresses of life and trading begin to build so you start your addictive pattern. You feel good because the stress is relieved and you are distracted from the underlying issue.  You have, anesthetized yourself.

Breaking the Cycle

There is a way to break this cycle.  There is an exit door.  This door is in the “Rationalisation” stage.  At this stage

  1. You notice the irrational barrage of arguments and counter arguments.
  2. You notice where it is heading.
  3. You draw your boundaries and say NO to the addict inside you (just like you would to a four-year-old who was insisting on drinking a bottle of bleach, throwing horrendous tantrums until he/she has had her/his way. You would not give in to her/him no matter what.  Would you?) Same applies here. You simply do not give in to the emotional, irrational side of you who is screaming, yelling, throwing a tantrum.
  4. You reward yourself in other ways.


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