Many of us are attracted to the world of Forex trading because of the potential for significant gains, along with plenty of opportunities to train the mind and will.
For some, the latter comes in second place only because the prospect of big returns is more attractive.
There are cases where Forex traders are in a position to win only, which makes them less focused on the process and only on profits.
But these preferences can lead to addiction, which can harm your account and your mind.
Let me tell you the story of the day trader who ended up wiping out his entire account for the third time in a row.
Despite this, he insists on continuing forex trading as he opens another live account. He even approaches prop companies and hedge funds to trade other people’s money because he believes his “passion” for trading will magically turn into profits.
To make matters worse, the day trader already has a family to support. No matter how much money he has already lost trading, he never takes a step back to comprehensively study the markets or revise his trading plan. Instead, he withdraws from his family’s savings in order to obtain more money for another account.
Does he really have a “passion” or is it just an addiction? You see, addiction to a particular activity occurs when a person becomes completely dependent on it.
This behavior is usually shown by people who are constantly looking for activity regardless of the amount of negative consequences it brings. What’s worse is that addicted people never seem to stop this activity even though it is starting to ruin their lives.
So how do you know if you’re actually addicted to trading and not just passionate about it? Here are some questions you should consider asking yourself:
- Do I often find myself still trading even after I’ve told myself to stop?
- Has trading created problems in my relationships with others?
- Has trading caused me financial problems?
- Have I ever been told that I am trading too much and that I should stop?
- Do I consider myself a big risk taker, betting more than 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 stronger than the satisfaction I get from winning?
If you 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 several ways in which you can overcome your trading addiction.
1. Take a rest
Leave your trading desk for a while and enjoy spending a few pleasant days, week or month on a tropical island with clear blue waters and soft white sand.
You can also play a sport, or maybe you can stay home and enjoy watching Netflix with some popcorn. Whatever you do, just make sure to give yourself time away from the charts.
Just like elite athletes, you need time to rest too. This will give your mind some time to recover from the stress of the market and help you return to trading refreshed and full of energy.
2. Keep a journal
If I had a dollar for every time I stressed how important this is, I would probably have enough money to acquire more bitcoins.
Journal your deals!
Often, those who have addiction are not aware of their condition. By having a trading journal that contains details of all your thoughts, ideas and actions, it will be easier for you to know if you have traded too much.
3. Know your limits
Determine the maximum trading loss. It can be anywhere between 1-3% per day. Simply set a specific percentage of your account as a maximum. This will help you exercise control over your trading which is something those with addictions do not have.
Remember, your top priority is to preserve your capital so you can live to trade another day.
I know that trading can get stressful sometimes. There are days when the market seems irrational and you feel the need to beat it.
However, you must be careful. Trading should be a way for you to practice discipline; Not a tool for self-destruction.
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