Am I addicted to FX trading?
The hidden dangers in plain sight
With the holiday season upon us it is worth reflecting on the psychological impact that FX trading can have. One of the most neglected areas to talk about amongst retail traders is the addictive nature of FX trading. The reasons for the neglect are obvious. Brokers want traders to trade as much as possible, as this increases their revenue. As a result they is a financial incentive to not bring it up. For the unscrupulous broker FX addiction is just an added bonus in their exploitation of the hapless retail trader. On the other hand, retail traders don't want to acknowledge what they already know to be true, namely that FX trading is taking up too much time. Especially as a breakthrough is just around the next corner. This article will explore some of the reasons FX trading is addictive, the signs it is impacting us and ultimately what can be done about it if you are currently under its influence.
The addiction of trading
The first aspect to be aware of is that FX trading is addictive. In a very similar way to the way that alcohol, drugs and sex can be addictive, FX trading can consume our attention and focus. The difference is that FX trading does not initially raise alarm bells in the way that alcohol and drugs would for most people. FX trading's pull is powerful, but not initially obvious.
The pull of trading
If drink and drugs promise an escape from a painful world, FX trading offers the promise of escape in a different way. Just think for a moment of some of the benefits that trading offers: working for yourself, working remotely from anywhere with an internet connection, the hope of financial freedom and the potential to make huge sums of money.
Some key indicators that you may be addicted to FX trading
Present in body, but not in mind
Assuming that you are holiday with your loved ones and family, you will not be able to give them your proper attention. If you are worrying about your position in the markets when you should be giving your attention to your friends and family then you really have to ask yourself some hard questions. Just because you can trade from any location at any time, it doesn't mean you should. As a father myself with teenage children remember that if you have children you will never get that time with them again when they are little, so make the most of it while you still have it. If you can't disengage from the markets to spend time with them on holidays, then that is a sure signal that something is wrong.
Ask your family and loved ones
Perhaps you could ask your family what they think about your trading? Perhaps they might say , yes, you can trade but can it be when we are in bed or after we have gone to sleep? You may find that they have very strong opinions on whether you do or don't trade. That may help make the decision clearer for yourself and it also might help you set boundaries or parameters for your trading during normal hours. I have met hundreds of aspiring traders and from time to time I meet a person who brings their spouse along to my trading events. The spouse is there to help with accountability and support. I always compliment people who do this and their strong marriage will help shield against some of the pitfalls of a potential FX addiction. At least the communication channels are open and accountability is sought rather than avoided.
Has trading become all consuming?
You don't have to be active in the the financial markets very long before you notice that they have a curiously absorbing affect pulling you in and consuming your thoughts. This is never so true as when you are actually in a trade, How is my trade going? Has Donald Trump been tweeting anything recently? I mean he tweets a lot . So, should you really inflict that level of distraction on your and possibly your loved ones on holiday? Trading intraday, with a regular job is not something that you should really attempt. It will lead to distraction from either your regular job, your family, or both.
Ask other traders
Finally in making the decision why don't you ask some other traders that you know. Do they trade on holiday? If they do are they happy that they do? How does their FX trading impact their family> If they don't, why not? You may be helped in your thinking by listening to others around you who are thinking through this same issue.
Loss of finance, home and relationships.
This is a tough one. Have you lost significant finances through FX trading. I have met a number of people who have lost significant finances through FX trading. What is significant is very different to people. Some people can lose £50K in an afternoon and it is no big deal for them or their finances. Others can lose £10K in a year and it is a disaster. So, what counts here is have you lost a significant amount of money for you? Has it impacted your relationships? Lost a spouse or partner because of it? Back in the early 2000's I volunteered for a homeless shelter and saw the upfront costs of drink and drug addiction. Loss of friends, sleep, spouse, home and health. It is sobering to realise that FX trading can have some of the very same impacts.
What can you do about it?
Well the first thing you could do is consider quitting FX trading. Chalk it up to experience and move on to something else. Never any shame in folding your cards if you have a losing hand. The second thing to do is to admit if you have a problem. Tell someone and try and get some support. The third thing to do is to re-evaluate your trading. Are you trying to trade intraday, when you don't really have time? Then look at swing trading. The number one thing you can do to minimise the impact of FX trading on your finances while you learn the ropes is to not over leverage.
Don't over leverage
This is the number one way halt a trading addiction. It is also the number one aspect that regulation has been tightening up over the world. Stop the leverage and stop the car crashes in people's lives. I have written about it here and here. If you have never read it and you think you may be showing some of the signs of an FX addiction then check it out now. It may help you in very significant ways and the holiday time can be a great time to help you reflect over your trading and what new directions, if any, you need to take.