Trading is the most difficult of sports: nowhere else does one begin a career by opposing the world’s most accomplished professionals.
Extreme trading size produces extreme emotional outcomes, leaving traders with certain trauma or addiction.
A universal trade setup: Hope, then despair.
Fidelity to purpose: the mark of good trades and great traders.
Mentors cannot achieve more for you than they have accomplished for themselves. (more…)
Archives of “addiction” tag
rssA Trade or a Gamble?
I love to trade a lot – which is of course a euphemistic way of saying I love to gamble. Although I have been to Vegas more than a dozen times I never laid down so much as a dollar bet in any casino. I have absolutely no interest in backjack, craps, slot machines or any other games of chance and I look down with disdain at the excited masses crowding the cavernous Vegas gambling halls. But deep down, if I am honest with myself, I have to admit that whenever I trade a lot I am just as much of a sucker as every hopeless loser that gives up his hard earned money to Steve Wynn or Sheldon Adelson
If you are constantly trading just for the sake of trading, just for the rush of being “in the game”, just for the momentarily thrill of being right you are gambling. You are trading without an edge, without any solid information and are therefore completely vulnerable to the random vagaries of price. (more…)
14 Symptoms of Stock Trading Addiction
- You know every stock symbol on the top of your head.
- You’re not satisfied until you can make a profitable trade to make up for bad trades.
- You enjoy the challenge of trading over actually making money.
- You are constantly flustered by the ups and downs of a stock in a given day.
- You start to make crazy excuses and blame others for your bad trades.
- You frequent message boards and social networks to try and pump up your stock.
- You are glued to the Twitter stream to see what traders are actively buying and selling.
- First thing you do when you get up and last thing before you go to sleep is check your stocks.
- You find and follow a new stock everyday.
- You start buying based solely on what somebody says.
- You bet large portions of your portfolio on a few stocks.
- You check your account balance every 5 minutes of market hours.
- You scoff at the trading strategies of other people.
- You never really actually get better at trading.
GAMBLING ADDICTION with trading
how many of you never seem to win consistently?
how many of you hold on because you did have some winning days which means you have potential?
how many of you tell yourselves that its not an addiction,its just a passion you have?
how many of you keep on replenishing your trading accounts because just like any business,you always lose money at the start?
how many of you tell yoursleves your losses are the BEST THING that ever happened because thats the best way to learn?
how many of you think of crafty ways to get some extra money wired into your trading accounts?
how many of you say you would have won if you only “stuck to your discipline”?
how many of you are just waiting FOR THAT SPECIAL DAY WHEN EVERYTHING FINALLY CLICKS AND YOU’VE FINALLY FOUND THAT EDGE?
how many of you fall into a depression and feel as if someone has hit you in the heart with a hammer aftr a big loss.
how many of you cannot wait for the next day to make some money back?
my favorite: “tomorrows a new day and i will start fresh, a new trading style that will be disciplined”.
there are many guys that make lots of money trading for a living..really,you seriously believe that?
Perfectionism
Trading is not about perfection. It is about probability and progress. All charts, analyses (fundamental and technical) and trading plans are built on probabilities.
Why then, do so many traders strive for perfection? Why do so many traders miss trades, waiting for exactly the right entry and then beat up on themselves when it doesn’t come and the position runs away while they sit there scratching their heads and condemning themselves?
Why are so many traders trying to turn a game of probability into one of 100% certainty?
The answer lies in one of the cardinal sins of trading which is PERFECTIONISM.
Perfectionism can be a great help to people in many professions, but can be fatal to a trader. Perfectionists, always trying to find the Holy Grail of trading go from one service to another, from one system to another, looking for a way that they can be right all the time. YES! Now, I found it. It’s this trading room, or this service, or this indicator! Wait… something is wrong here. Not all of these trades are working and I have draw downs! How can it be that this particular method failed and I actually had to take a loss? Must be something wrong. I will try harder and look for an even better system, a more expensive service, a new and improved guru, some absolutely no-fail software so that I can have ONLY WINNING TRADES. (more…)
Random Prize
I have been reading Mark Douglas’s excellent book Trading in the Zone and he hits on the most amazing point regarding the effect of random rewards. In brief, it goes like this:
If you teach a monkey to do a certain task and reward him when he does it, he will learn how to keep doing the task to get the reward over and over.
Following this, if you cease to give him the reward he will quickly cotton on and stop doing the task.
However – if you give the monkey a RANDOM reward, he falls into a sort of mesmerized state of addiction where he will keep doing the task continuously, even if no more rewards come. This is exactly why people are addicted to gambling, and if you look at your trading life it might be the same: random rewards.
This got me to thinking about how a trading plan combats this effect and once again proves itself indispensable, because in a sense you move the whole pattern over to the first scenario where if you follow the plan you get the reward. The effect will still be there of course because not every trade is a winner, but it is the only realistic antidote to this obviously primal reaction to receiving random rewards.
I’ve heard this from other sources too – in Robert Greene’s 48 Laws of Power he talks about how random patterns of reward and punishment are actually a key factor in both manipulation and brainwashing. This is known to also drive animals of all kinds mad.
You see how deep and penetrating this effect could be if you are trading without a plan? No plan means basically random trading, which means random reward and punishment dished out from the market, creating an addicted state of anxiety crossed with eurphoria – you know what it feels like I’m sure.
How can you tell when a trader is passionate about trading vs. addicted to it?
The first step in dealing with any addictive pattern is identifying it–and identifying it as a problem. Here are a few questions that you might ask yourself:
* Have there been times when I told myself to stop trading, but still found myself placing trades any way?
* Do I find myself overtrading by putting on positions with too large size or by trading during periods when nothing is happening?
* Have my trading losses created problems for me in my relationship(s), or have they caused financial problems for me?
* Have people close to me told me that I need to stop trading?
* Is the pain from losing more extreme than the satisfaction from winning?
* Do I find my moods fluctuating with my P/L?
* Do I trade simply out of boredom sometimes?
* Do I find myself preoccupied with trading outside of market hours at the cost of other work and relationships?
Notice that, for many of these questions, you could substitute the word “drinking” or “gambling” for “trading”. The dynamics of addictions are the same across the board. If you answered yes to three or more of these questions, I would suggest that trading has become a problem for you.
How does one deal with addictive trading? The first step is to identify it, but the second–and harder–step is to acknowledge that you need help for it. It’s pride that tells us we can handle it on our own through will power, but addictions wouldn’t occur in the first place if will power were sufficient to prevent consequences. (more…)
Trading Addiction
The tell-tale sign of trading addiction is a trader who cannot refrain from trading–even when markets are objectively offering no opportunity. Even when losses are mounting.
Perfectionism
Trading is not about perfection. It is about probability and progress. All charts, analyses (fundamental and technical) and trading plans are built on probabilities.
Why then, do so many traders strive for perfection? Why do so many traders miss trades, waiting for exactly the right entry and then beat up on themselves when it doesn’t come and the position runs away while they sit there scratching their heads and condemning themselves?
Why are so many traders trying to turn a game of probability into one of 100% certainty?
The answer lies in one of the cardinal sins of trading which is PERFECTIONISM.
Perfectionism can be a great help to people in many professions, but can be fatal to a trader. Perfectionists, always trying to find the Holy Grail of trading go from one service to another, from one system to another, looking for a way that they can be right all the time. YES! Now, I found it. It’s this trading room, or this service, or this indicator! Wait… something is wrong here. Not all of these trades are working and I have draw downs! How can it be that this particular method failed and I actually had to take a loss? Must be something wrong. I will try harder and look for an even better system, a more expensive service, a new and improved guru, some absolutely no-fail software so that I can have ONLY WINNING TRADES. (more…)
Trading Wisdom – Perfectionism
Trading is not about perfection. It is about probability and progress. All charts, analyses (fundamental and technical) and trading plans are built on probabilities.
Why then, do so many traders strive for perfection? Why do so many traders miss trades, waiting for exactly the right entry and then beat up on themselves when it doesn’t come and the position runs away while they sit there scratching their heads and condemning themselves?
Why are so many traders trying to turn a game of probability into one of 100% certainty?
The answer lies in one of the cardinal sins of trading which is PERFECTIONISM.
Perfectionism can be a great help to people in many professions, but can be fatal to a trader. Perfectionists, always trying to find the Holy Grail of trading go from one service to another, from one system to another, looking for a way that they can be right all the time. YES! Now, I found it. It’s this trading room, or this service, or this indicator! Wait… something is wrong here. Not all of these trades are working and I have draw downs! How can it be that this particular method failed and I actually had to take a loss? Must be something wrong. I will try harder and look for an even better system, a more expensive service, a new and improved guru, some absolutely no-fail software so that I can have ONLY WINNING TRADES.
This is perfectionism in action. Not only does this type of irrational behavior and belief undermine and demoralize a trader, but it takes away all the enjoyment and fun of being in the markets. It leads to depression with depletion of psychic and physical energy, and leaves the perfectionist to confront his basic and overriding fear— fear of failure. In the extreme, it leads to physical and mental illness, including addiction to prescription drugs, alcohol, or illegal substances as well as other addictions. The pain of failure or the haunting fear of failure is simply overwhelming, and one turns to whatever works to medicate the pain.
“Life can be lived forwards, but can only be understood backwards” ~Soren Kierkegaard (more…)