Day trading on the stock market is quite a popular activity among investors worldwide, as it is often stimulating, exciting, and engrossing. Several people also think day trading can help them get a better income during lucky times. This is precisely why day trading can become addictive.
People can get addicted to day trading just as quickly as they can develop an addiction to casino gambling. Just like any type of addiction, it can lead to severe consequences on a person’s economic and social life. It can all be narrowed down to the way day trade can affect your brain and understand how the reward system works.
Trading can be a good way of having a constant revenue, as long as one does it with great care, following a strategy. However, one must understand the key points that differentiate trading from gambling, to prevent an ongoing addiction.
It turns out that several people treat day trading like an everyday job, without the commitment of having a boss or being embedded in a company. Many dream of becoming financially independent by doing this activity, and several traders will fall into the trap of leveraging to see their financial dream become a reality.
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The concept of leverage refers to the action of using borrowed money as the foundation of investing to expand a firm’s asset base to generate returns on risk capital. The leverage strategy is an investment maneuver of using borrowed money to increase the potential return of an investment.
However, the fundamental problem is that day trading is a speculative business that comes together with high risks. The leveraging usually goes down just as fast as it goes up. According to research, 90% of the amateurs who engage in day trading lose money in the markets.
Research has shown that a small part of our brains – called nucleus acumens – is responsible for reviewing our reactions to certain experiences. It is the “pleasure center” of our brain that responds to excitement rewards by offering us a state of euphoria.
Our brains produce an opium-like substance called dopamine that acts as a reward to our mind’s pleasure center. By doing so, as we get rewarded for some activities, we learn to do them more passionately.
So, it should come as no surprise that starting daily trading becomes increasingly difficult with time, as the mind gradually becomes addicted to dopamine. Even if our financial solvency is in danger, we will keep trading on the stock market once we are addicted.
One should keep in mind that psychological and genetic factors can greatly contribute to a person developing a day trading addiction. Underlying mental health issues can also make the mind more vulnerable to dopamine, so people get addicted much easier.
A history of gambling can also favor the development of trading addiction. It turns out, some people are genetically more likely to become addicted than others. However, the factors that potentiate a trading addiction are more diverse than one may think at a first glance.
Trading can sometimes be more dangerous for a vulnerable mind than gambling. Your loved ones may not see a pathological need for trading as being problematic as trading stocks is widely perceived as a viable and legitimate source of income.
When it comes to gambling, because of the stigma that surrounds it, your loved ones will be more likely to notice you are having an addiction.
Moreover, as our rewarding system can function on partial reinforcements, traders may return to the marketplace to try their luck again even after losing great sums of money over a long time. Since winnings will also probably come to be at some point or another, people may feel pressured to get involved even more in day trading to make up for the sums they lost.
Recognizing the signs of a developing trading addiction may be a difficult task but looking out for any dangerous symptoms may save us from losing large sums of money. The first sign your trading activity may turn into addiction is the impulse of taking increased risks without a thorough strategy.
Feeling the need of making bigger wagers to feel the same satisfaction or excitement as you did in the past may also prove to be extremely problematic, as it can lead to significant financial losses. Moreover, you should always strive to trade by following a well-researched strategy. Trading solely for feeling the adrenaline rush is a main sign of addiction.
There is nothing wrong with being passionate about trading stock. However, once the passion leads to an obsession, as you constantly watch the stock market to the point of having this activity take over most of your free time, maybe it is time to take a step back and rethink your mindset.
Trading can be a good hobby and even a fun way of generating an income in some circumstances. However, if you notice that are you increasingly losing interest in the free-time activities you used to engage in, it may be time to consider you may have an addiction.
No lucky odds are worth damaging your mental health for. If you experience severe stress, irritability, or anxiety, especially when not trading, it may be due time to ask for help in order to manage your trading addiction symptoms.
Severe addiction symptoms include having to steal or make loans in order to be able to trade more. Lying to your loved ones about your problematic habits should also be an alarm sign that your addiction has become a danger to you and the ones that surround you.
The first step you may take in trying to shoulder a trading addiction is deleting or removing all the devices or websites that can allow you access to trading. Engaging in other activities – although you may not feel an inclination to do so in the beginning – has also proven to be quite beneficial.
One of the first stages of recovery may require having your funds monitored by a loved one in order to help you shoulder the urge of trading. Spending time doing social activities like engaging with people close to you may help you bear easier with feelings of anxiety and loneliness that may trigger a relapse.
It turns out that, just like it is the case with all addictions, relapse rates for day trading are very common, due to the disruption of the brain’s reward system. If a relapse happens, it may be time you seek professional help.
There are several psychotherapeutic options available for people that are struggling with a trading addiction. It turns out that cognitive-behavior therapy is one of the most advised kinds when dealing with a trading addiction.
Cognitive therapy is often used to help change unhealthy or damaging thoughts and behaviors. In some cases, medication can also be prescribed to help combat withdrawal states. Group therapy can also come in handy, especially when a trading addiction is associated with feelings of guilt or shame.
Day trading can turn into a gambling addiction if people stop basing their actions on research and strategy, and instead appeal to emotions and impulse in making choices. Keep in mind that a trading addiction can be just as dangerous and damaging as a casino gambling one.
If you feel like you can no longer keep your trading habits in check, maybe it is time to take some cooling-off time and reflect on your current situation. It is never too early to seek help when needed, and it’s always better to prevent addiction than to treat it.
Trading can be a very productive and enticing activity, as long as you do it sensibly and prudently, making a strategy based on actual research instead of hope and drive. After all, too much of a good thing can be wonderful indeed, if one takes time to get some proper training before acting, as professional traders are more likely to succeed in their endeavors.
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