3 Ways to Overcome Forex Trading Addiction

Updated from its original posting on 2012-01-27

Whether we admit it or not, many of us are lured into the world of forex trading because of the potential to score big bucks, along with plenty of opportunities to exercise one’s brain and will. For some, the latter only comes in secondary as the prospect of making sizeable returns is more appealing.

There are instances when traders are just in it to win it, leaving them less focused on the process and solely on the profits. During these times, trading can have the potential to turn into an addiction, eventually damaging both the mind and soul.

To illustrate, let me tell you the story of a day trader who ended up wiping out his entire account for the third time in a row. Despite this, he insists on pursuing forex trading as he opens yet another live account. He even approaches prop firms and hedge funds to trade other people’s money as he believes that his “passion” for trading will magically turn into profits.

To make things worse, this day trader already has a family to support. No matter how much money he already lost in trading, he doesn’t take a step back to study the markets thoroughly or revise his trading plan. Instead, he dips into his family’s savings in order to get his hands on more money for another account.

forex trading addictionDoes he really have “passion” or is it merely an addiction? You see, an addiction for a certain activity occurs when a person becomes completely dependent on it. This behavior is typically shown by people who continuously seek out the activity no matter how much negative consequences it brings. What’s even worse is that people who are addicted can’t seem to stop the activity even though it’s starting to ruin their lives.

So how do you know if you’re already addicted to trading and not just passionate about it? Here are a few questions you should consider asking yourself:

  • Do I often find myself still trading even after I have told myself to stop?
  • Has trading created problems in my relationships with other people?
  • Has trading caused me financial problems?
  • Have I ever been told that I’m trading too much and that I should stop?
  • Do I consider myself a big risk-taker, betting more than what I know I should on certain trades?
  • Have I tried to erase my losses by increasing my positions?
  • Are there times when I trade just because I’m bored?
  • Do I feel the pain of losing more intense than feeling of satisfaction I get from winning?

If you’ve answered yes to all or most of the questions, take a deep breath and calm down. It’s not the end of the world. There are a few ways that you can get over your addiction to trading.

1. Take a break

Leave your trading desk for a while and treat yourself to a nice couple of days, a week, or a month on a tropical island with clear blue waters and fine white sand. If not, go out and play a sport, or maybe you can just stay home have an Entourage marathon with some popcorn. Whatever you do, just be sure to give yourself time away from the charts.

Just like an elite athlete, you need time to rest too. This will give your mind some time to recover from market stress and help you come back to trading refreshed and full of vigor.

2. Keep a journal

If I had a dollar for every time I stress how important trade journaling is, I’d probably have enough money to buy my own island. More often than not, those who have an addiction are not aware of their condition. By having a trade journal which details all your ideas, thoughts, and actions, it will be easier for you to see if you have been trading too much.

3. Know your limit

Set a maximum trading loss. It may be anywhere between 1-3% per day. Just set a concrete percentage of your account as your limit. It will help you exercise control over your trading which is something that those who have an addiction do not have.

Remember, it is your top priority to preserve your capital so that you may live to trade another day.

I know that trading can become overwhelming sometimes. There are days when the market just seems irrational and you feel the need to conquer it. However, you must be careful. Trading should be an avenue for you to exercise discipline; not an instrument of self-destruction.

  • Akum

    Thanks Pipsychology! This to me is the best post I’ve read so far about our industry. I choose to call it “industry” because after all the research I’ve done, trading to me is not a job. It is a business! One basic difference between the two; With a job if you don’t show up regularly you get fired. With trading the more you show up, well… you’ll get fired!
    I see trading as ” the perfect result of how irrational humans can be when it comes to taking decisions directly related to money management”. Well I’ve come to realiZe that trading is rather shaping me; all of a sudden I find myself saving every cent I have for the future. And that of course is what successful traders do. No doubt less than 10% of all traders END UP BEING SUCCESSFUL!

    • Dr. Pipslow

      And thanks for checking out my blog and taking time to share your thoughts! That’s a good way of putting it, as a business also requires you to evaluate strengths, weaknesses, opportunities, and threats then continuously develop ways to stay on top of your game.

  • Dr. Pipslow

    Thanks for checking me out and I’m glad to hear you like it! Good luck and hope to see more from ya fxfreeme!

  • Dr. Pipslow

    Thanks for checking out my blog Sandy! Yeah, sometimes people forget that there are certain limits to what we can do and how far we can push ourselves. That doesn’t mean we can’t keep reaching for the stars, but that we just need to take a few pit stops along the way 🙂