Trading is different than gambling since it’s not reliant on luck, but people can become addicted to making money through the financial markets. Knowing the signs and ways to overcome a forex addiction can help you avoid becoming a victim to this situation.
Is forex trading addictive? Yes, it can be. Activities that people enjoy can turn into addictions. This includes forex trading. Trading addiction is not physically damaging like drugs and alcohol can be, but it is often harmful financially. A forex addiction occurs when a person concentrates more on making money than on the actual trading process.
The key to avoiding forex addiction is understanding what it is and knowing the warning signs that it is becoming compulsive. Why is it addictive? Forex trading can be addictive because:
- It doesn’t cost a lot.
- You can make trades on your own terms.
- It’s easy to access.
- Trading successfully is an adrenaline rush.
Forex trading is something that anyone can do. It is fun and potentially lucrative. Read on to find out more about the addictive properties of forex trading.
Table of Contents
When Can Forex Become an Addiction?
People often become addicted to forex trading because they don’t need a large amount of capital to do it. These days, you can create a live forex trading account with a mere $500. This amount of money will allow you to open a standard account. There are micro-lot accounts available, and you can open one of these with even less capital. In fact, you can create a micro-lot account with just $5.
Depositing funds into a forex trading account is as easy as opening one, and there are different ways to do it. You can use a credit card or your checking account. The low capital requirement is probably one of the main reasons why traders become addicted to forex trading. The reasoning behind this is how it compares to the stock market. It is likely that you have never met a trader who was addicted to making trades in the stock market because trading in the stock market requires more capital than most people have.
The way that the forex operates puts some people at a higher risk of developing an addiction to it than others. Behavioral patterns can lead to a financial disaster. For instance, if someone starts trading and is successful initially, then they may feel as though they have a knack for it and will spend more money trading in an effort to make enough funds to retire. Often, first successes like these are beginner’s luck, which is something that commonly occurs. When these successes are beginner’s luck, they are likely to transition into major losses.
Signs of Trading Addiction and How to Detect Them
When traders start to lose a lot of money, they usually attempt to earn it back by taking more risks. This is a move that ends badly for most people. They often lose more trying to get it back. This doesn’t always signal that the person is experiencing a true addiction. They may just be trying to avoid financial ruin.
There are a few telltale signs that you are suffering from a trading addiction. These include:
- Spending the bulk of your free time trading instead of with family and friends
- Allowing your life to revolve around forex trades
- Investing more and more money into the market
Someone who is addicted to trading may be more aggressive and share feelings of frustration. A heavily addicted person may neglect his or her personal hygiene and overall health. If you’ve started borrowing money from family members or friends to continue trading or you have increased the balance on a credit card to the point of having to use another credit card to pay it off, then it’s likely that you have a trading addiction problem.
Trading vs Gambling
The main difference between forex trading and gambling is that with casino gambling, the house is expected to win. Forex trading can allow you to swap roles and give you the power of the house. However, it must be done skillfully and cleverly.
Consequences of Trading Addiction
A trading addiction comes with consequences that may include financial difficulties, a loss of close family members and friends and a failure to take care of yourself properly. You may find yourself lying to borrow money or selling important possessions to keep trading.
Traders can make a lot with a forex trading account. Along with this, you can do it on your own terms without a supervisor overseeing your every step or by being locked into a company. These factors can make it easier to become addicted to trading. With forex trading, you also have a lot of different ways to make money regardless of whether the markets are increasing, decreasing or holding steady. It’s possible to make a profit fast, too.
Technically, forex trading could allow someone to become financially independent, which is something that people who generally work a 9-to-5 job long for. The thing that most traders fail to realize is that becoming financially independent with forex trading is unlikely to happen when one considers the statistics. The numbers confirm that an estimated 90% of novice traders lose at a consistent rate.
The biggest problem with forex trading is that the business is risky and unpredictable. The leveraging in the forex drops as quickly as it rises. If it decreases on you, then you can lose everything and more in a heartbeat.
How to Prevent and Overcome Trading Addiction
Individuals who obsess over their interests and passions tend to achieve successes in their lives. People who don’t have obsessions are still likely to live happy lives, but they might just live quieter ones. When you look closely at the lives of some of the world’s most memorable musicians, doctors, scientists and traders, they allowed themselves to become absorbed in the thing that they were passionate about. However, these successful individuals knew their limits and stopped attempting to achieve when continuing on would be unhealthy.
If you enjoy trading, it doesn’t automatically mean that you have a forex addiction. If you’re trading instead of doing other important things, then you have a problem. Knowing when you need to stop is the key to being a successful trader. If you don’t stop, you’ll enter a cycle that addicts of all kinds experience. The cycle is to overdo things and then experience regret over and over again until you must make a change.
What is the best way to manage an addiction? The first step is to acknowledge that you have no control over the forex market. It is a living, changing thing, and thinking that you have power over how it works is a fantasy, one that will cause you to make poor trades. Once you’ve decided to try your hand at trading, the best way to go about it is to implement a good trading strategy. Make sure that it includes a profitable probability template that will give you an advantage with time. Never forget that no one ever knows for sure what will happen in the market at any moment.
The next step to handling a trading addiction is to be honest with yourself about your emotions. When you start trading, make sure that you consider how you handle loss, situations that are out of your control and stress. Do you have any personal issues that might impact how you trade? When you make money trading and are experiencing an emotional high, stop making trades and move away from your trading device. To be successful and avoid addiction, work on overcoming your personal weaknesses and focus on your strengths.
Learning What Happens in Your Brain, Identifying Triggers
Addiction to anything is an ongoing neurological disease that is heavily impacted by genetic vulnerability. A person who experiences addiction inherits the condition or obtains it because of brain chemistry abnormalities. Someone who is addicted to forex trading may face social and environmental factors that will impact the disease and affect how they handle it, but these are not why a person suffers from the addiction.
Addiction occurs due to the development of a set of chemicals. These are called tetrahydroisoquinollines, or TIQS. They feature many of the same pain-relieving compounds that opiates provide. As opiates that develop in the body naturally, as well as synthetic ones such as heroin or morphine, TIQS are addictive elements. If enough TIQS develop in the vital areas of a person’s brain, they can cause the chemistry of the brain to change. This change produces pathological cravings.
It’s likely that the same thing happens with a forex trading addiction. If you are related to anyone who suffers from any addiction, then you will be more likely to experience trading addiction. Just like drugs and alcohol, people might use forex trading to escape the realities of life and numb unpleasant emotions.
Addictions happen when doing an activity gives you a powerful stimulation that you must experience. Mental health experts consider a behavior an addiction when a person continues to perform an activity even if it has destroyed everything in their life, including ruining personal relationships. If a person is unable to stop doing a particular activity when the consequences of doing it interfere with their life, then it is an addiction.
Traders can become addicted to the forex because it’s easy to access. If you’re considering trading and you have concerns about whether you can handle it, step into forex trading by trying several forex demo accounts. Once you’ve selected a broker, you’ll complete a sign-up process that’s similar to opening up a checking or savings account. After setting up a forex account, you can make trades using a computer, smartphone or a tablet. All you have to do is sell an order or place a buy.
Once you’ve made a few trades, home in on how you feel. Are you stressed or excited? This will help you determine if you’re more likely to become addicted. Trading can be safe if you go about it the right way.
If you suspect that you have a forex trading addiction but aren’t sure, then ask yourself a few questions. For instance, ask if it’s impossible for you to stay away from the market. Do you keep trying to stop trading but continue to go back to it again and again?
Overcoming an Addiction
This is a situation that you can’t get around. The only thing that you can do is see it for what it is and detach yourself emotionally from the money part of trading. To avoid addiction, you have to focus on the trading itself instead of whether you made a profit. Create a set of rules that you can stick to. Then, focus on whether you stuck to your rules when trading. That way, you can create a consistent technique.
Trade With Awareness
Gamblers never come out on top. The reason for this is that they experience losing more powerfully than they do the happiness of winning. People who are thrill-seekers are drawn to gambling because the experience is strong and intense. To avoid addiction, you must trade with awareness.
Treat trading as a business. Establish a plan, select spending limits and add a time to stop. If you experience negative feelings when you aren’t profiting regularly, write out a trading strategy. Consider keeping a journal dedicated to trading and create a system that covers your trading system step by step. Try to avoid trading based on gut feelings. Practice making trades like you’re a robot.
When you make money trading, you will feel joy. It’s unavoidable, but it doesn’t have to be something that you are addicted to. Avoiding addiction requires you to control the stress, good feelings and bad feelings that come with it. If you do, you can trade forex without becoming addicted to it.
Why Is Forex Trading So Addictive Even After Losing So Much?
When you make money on a trade, you’ll experience an adrenaline rush. A win causes endorphins to saturate your brain, delivering a feeling of pleasure. The endorphin reaction makes trading a pleasurable experience instead of the process being a practical choice that you make tactically and consciously. If you reach a point where you’re trading for the thrill of it, then it could turn into an addiction. Consider the fact that the forex is a 24-hour market that’s available to you at any time of the day or night.
Trading can be highly addictive even when people lose a lot because that is the nature of an obsession. You need a bigger and bigger dose to reach the same peak that you experienced during your first high. With trading, it’s the high of making a lot on a trade. It’s natural to feel a major high when you win. The addiction happens when you start making larger and larger trades to feel the same initial rush.
How Do I Overcome Forex Trading Fears?
You can overcome forex trading fears by establishing a trading plan and having robust trading psychology. Learn more and practice your trading techniques. Also, give yourself time to learn.
How Did You Maintain Your Mental Health When Forex Trading?
To maintain your mental health when trading, be sure to set up a structure for yourself. For instance, limit the amount of trades that you’re doing or balance it by investing in other places or ways.
What Are Some Good Techniques to Manage Emotions in Forex Trading?
It’s important to manage your emotions when trading. You can do this by looking at trading as though it is a business. Establish an official system for yourself, one with rules and regulations.