Real addictions are a very grave matter and while trading doesn't involve the consumption of any substances, there are the ones that accept that trading is actually addictive. The incredible emotional rushes that most traders experience both prior to placing a trade and while in the middle of a big winner or enormous loser are an acknowledged part of trading, but are traders actually becoming addicted to trading?
Is there a need for help for traders with Forex broker, or is the situation one where the high percentage of traders that lose money is just due to them still being in the learning curve and suffering the losses as a standard part of "paying your dues"? In this article we are going to analyze the problem and establish if there's satisfactory proof to support the conjecture that trading is indeed addictive.
So what constitutes an honest to goodness addiction? There are 2 categories of addictions, physical dependence and mental dependence. There's a substantial quantity of information on both and certainly beyond the remit of this piece of writing, but a brief outline follows
So an obsession could be represented as someone feeling the "need" to frequently take part in a particular behaviour to satisfy a wish to have the emotional effects that's has, the feelings that it produces. It's a want that they have rationalized into a need, to which they have surrendered control, and they have permitted the behaviour to develop into a habit. This is physiologically compounded by the endorphins released into the system that provide a physical feeling effect too. Let us take a look at some of the mandatory practices ( behaviors ) of trading to achieve regular profits and some of the behaviors exhibited by many traders and see if they fit the above.
One recognized urgent practice for profit-making trading is good risk management. At the heart if this is ensuring that the hazards you take are measured and worked out risks. You need to keep your losses tiny when they occur and avoid them all together when possible ( like not getting into bad trades ). Key tools commonly used for controlling possible losses include risk / reward calculations and stop loss orders. Risk / reward calculations are necessary on every trade so you know whether each Forex trade is a sound business decision. Stops are used so that then a good trade is placed but the market doesn't do what you'd expected. With the leverage in trading that may work for or against you, risk control is important.
General money management is another imperative practice to make sure that your trading business will still have the doors open months and years from now. It includes risk control but the focus is on a larger scale and a wider scope, such as taking a look at what percentage of your available capital you are placing on any given trade, without regard for the details of the categorical trade.
These practices may appeal to the intellect, but how they feel is where traders get into difficulty. There are a few typical mistakes regularly manufactured by traders that bring enormous losses, missed profits, and ruin for many . These mistakes run in direct conflict with the known and established good practices for consistent and profitable trading, yet are made again and again again by the same traders. Since they are repeated, it might be reasonable to claim that they became habits. Let's examine these habits from the viewpoint of the emotional response for the individual person.
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