Post feedTraders and Drinkers...Are We Different After All?
If you find this post offensive, relax. This post is not intended to offend, only to discuss more trading psychology. I pass no judgments on this topic because I have lived through this subject in different aspects myself. I came across an article that correlates destructive trading to destructive alcohol consumption. Take a quick look at this questionnaire that professionals use to determine the severity of alcohol abuse...1) Have you found that your drinking is bringing unwanted, negative consequences?
2) Have you recently felt guilty over the way you have been drinking?
3) Do you find you need to drink more just to get the good feeling?
4) Do you find that your personality changes when you drink excessively?
5) Do you find it difficult to take a break from drinking, even when part of you knows that this would be best for you?
6) Do you find yourself drinking to feel good about yourself?
7) Do you sometimes feel that you cannot control how much you drink?
8) Do you find yourself getting angry when someone close to you questions your drinking?
9) Do you find yourself vowing to limit your drinking, only to slip back into overdrinking?
10) Do you find it difficult to not drink given the opportunity, even when the occasion is not really appropriate?
Like I mentioned, these were questions that are typically asked by a psychologist when confronting someone struggling with alcohol consumption. You can apply this to any substance abuse, addiction, or whatever struggles you cope with. The question is "What about trading?" Take a look at the modified questionnaire...
1) Have you found that your trading is bringing unwanted, negative consequences?
2) Have you recently felt guilty over the way you have been trading?
3) Do you find you need to trade more just to get the good feeling?
4) Do you find that your personality changes when you trade excessively?
5) Do you find it difficult to take a break from trading, even when part of you knows that this would be best for you?
6) Do you find yourself trading to feel good about yourself?
7) Do you sometimes feel that you cannot control how much you trade?
8) Do you find yourself getting angry when someone close to you questions your trading?
9) Do you find yourself vowing to limit your trading, only to slip back into overtrading?
10) Do you find it difficult to not trade given the opportunity, even when the occasion is not really appropriate?
Brett Steenbarger wrote about this topic, and here were a few comments he made that I found intriguing...Fear and greed are potent influences on trading, but the greatest trading problems, I find, are addictive in nature. Successful traders really want to trade; they have a passion for trading. Addictive traders need to trade; they have a passion for action and excitement.
An addictive trader will not manage his risk. That is because risk is part of the high.
An addictive trader will not stop trading, even when losing money. That is because action, not profit, is the goal.
An addictive trader will cycle between periods of guilt and responsibility and periods of excess and irresponsibility.
Good traders trade actively. Addictive traders overtrade.
If you see yourself in this profile, do the right thing, before your patterns ruin your career and harm those who depend on you. Get help. You can change. Your trading and your happiness lie in the balance.
Perhaps the content here is a little severe. I'm not sure that all of us have reached a point that is remotely close to this. I do feel that emotion creates instability in this complex and irrational world we participate in. I met with a trading psychologist this year for this same reason. Even though me know emotion is our enemy in this business, even for someone who knows and understands the importance of this, even I can't help but react emotionally sometimes. Such is life. I noticed that as I went through a rough spot this year, I responded "yes" to many of these questions. What is important is being able to recognize this problem quickly and turn it off. The quicker you can identify this destructive pattern, the easier it is to close up shop and walk away. This is what I did and it gave me time to re-think what I was doing, and to get help through it.
Always be focused on why you trade. What are you goals? Why do you trade? Is trading a hobby, or is it a business? Be mechanical, and as we always discuss...try to stay un-emotional.
I just started reading "Trading for a Living" by Alexander Elder (on a suggestion from someone at InvesTools - don't recall who). The first section is this same thing - relating excessive trading to being an alcoholic. As a new trader I can see how it could happen. It is always exciting, sometimes exhilirating, and sometimes scary. Who wouldn't want more of that?
Posted by
Anonymous |
10/05/2006 07:26:00 PM
Great post Jeff. I have raced almost anything that I could get into for quite a bit of my life. At one time I spent a huge amount while living in squaller. Now that I am older with a family I have given up racing (for the most part). Last week I told my Wife that I felt that trading and racing were very similar. You need to completely take the emotion out of it, or you ill go nuts. If you put the buiness plan together and do all of your homework you will reap the rewards. That being said, youcan't go off of the deepend when you win and you can't quit i you crash-out. Next week starts anew and what you did last week doesn't mean anything. I got out of racing once when I realized I was paying all of the bills. I went back in after figuring out how to make $$$ doing it. The later was much better.
Posted by
Anonymous |
10/05/2006 08:18:00 PM
Jeff,
Where on investools do you teach option pricing and volatilty ?
Posted by
Anonymous |
10/06/2006 07:46:00 AM
Karen,
Adv. Options Trading Rooms Session 3. It is listed as one of the "Debit Spread" sessions.
Posted by
Option Addict |
10/06/2006 08:28:00 AM
Thanks Jeff,
I just started joined the adv. options wednesday!
Karen
Posted by
Anonymous |
10/06/2006 09:47:00 AM
You have a knack of keeping a lot of us in line as we begin to stray. I answered "yes" to many of the questions. Trading, not drinking. I think I need to take a break and have a drink. JUST KIDDING.
Seriously;
Thanks !!!!
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