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goes beyond being a form of earning a living and crosses over into becoming a serious problem? |
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First, we need to distinguish between overtrading and dependent-addictive trading. Overtrading is simply poor money management. It is trading too often to be able to make any money because too much is being racked up in commissions. |
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Overtrading is what happens with minute traders, who literally are in and out of a position within a minute or two and who do this up to a hundred times or more in a trading session. They are a comparatively small group of hypertraders who push the outside limits of day trading. Sooner or later, they realize they are not making enough profit on their hypertrading to make the costs worthwhile. |
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Hypertraders may or may not end up dependent, in the sense that they can't stop trading without noticeable symptoms of psychological withdrawal. Even if it may not be the smartest approach to active trading, minute trading may simply be a style of trading that does not necessarily lead to dependence. |
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Here are the signs of a gambling addiction that have been slightly altered to apply to active trading. They may serve as guidelines as to when traders may have gone too far. |
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Five or more of these signs taken together mean the gambling is bad enough to be considered meeting the criteria for the diagnosis of "pathological gambling" in the manual used by mental health professionals to determine mental, emotional, and behavioral disorders. |
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Signs of Trading Addiction |
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1. Is preoccupied with trading (reliving past trading experiences, planning the next trading experience, or thinking of ways to get money with which to trade). |
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2. Needs to trade with increasing amounts of money and in increasing numbers of shares to achieve the desired excitement. |
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3. Has repeated unsuccessful attempts to control, cut back, or stop trading (for example, chases losses when heavily in debt, borrowing on margin). |
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4. Is restless or irritable when attempting to cut down or stop trading. |
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5. Takes trading losses out on family and friends through outbursts of anger, irritation, or physical violence. |
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