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The American Medical Association is currently reviewing the possibility of adding “video game addiction” to a handbook regarding mental illness. Depending on your personality and how you view trading overall, you may be battling an addiction as well. If the AMA is debating video game playing, then active or day trading may not be that far behind. As we pointed out, gambling has a strong component rooted in “ chance”; speculating involves more calculating based on cause and effects. Nevertheless, trading can be turned into a gambling game. In the past 14 years of my experience, I have seen traders time and time again drive themselves insane over trading, making wrong decision after wrong decision primarily because they became reactionary. For whatever reason, the cycle was constant: Open an account; invest on a whim; at the first sign of trouble, hold on for too long. When they are profitable, they get out right away. Never let these guys have a big win right away—feelings of invulnerability kick in. Many of the losing traders end up looking like addicts, whether they are or not, solely because they do not know how to stay on track and be disciplined in their trading. If you are gambling when it comes to your trading, then you need to stop trading—immediately. The highs and lows that come from winning and losing can create a false sense of excitement and enjoyment. While I am not expert on addictions, I do want to put a spotlight on the possibility of your being addicted. I want to give you the tools that will help you and your family to have an enjoyable life. The definitions and diagnosis criteria are excerpted from Gambler’s Anonymous. I suggest you visit their web site at www.gamblersanonymous.org. I hope that none of you are gambling when it comes to futures. I hope that you all are striving to become or are currently speculators. In the event that you are not or are having difficulties, following are some questions excerpted from the Gamblers Anonymous web site. Gamblers’ Anonymous 20 Questions 1. Did you ever lose time from work or school due to gambling? 2. Has gambling ever made your home life unhappy? 3. Did gambling affect your reputation? 4. Have you ever felt remorse after gambling? 5. Did you ever gamble to get money with which to pay debts or otherwise solve financial difficulties? 6. Did gambling cause a decrease in your ambition or efficiency? 7. After losing did you feel you must return as soon as possible and win back your losses? 8. After a win did you have a strong urge to return and win more? 9. Did you often gamble until your last dollar was gone? 10. Did you ever borrow to finance your gambling? 11. Have you ever sold anything to finance gambling? 12. Were you reluctant to use “gambling money” for normal expenditures? 13. Did gambling make you careless of the welfare of yourself or your family? 14. Did you ever gamble longer than you had planned? 15. Have you ever gambled to escape worry or trouble? 16. Have you ever committed, or considered committing, an illegal act to finance gambling? 17. Did gambling cause you to have difficulty in sleeping? 18. Do arguments, disappointments, or frustrations create within you an urge to gamble? 19. Did you ever have an urge to celebrate any good fortune by a few hours of gambling? 20. Have you ever considered self-destruction or suicide as a result of your gambling? Most compulsive gamblers will answer yes to at least seven of these questions. 10 Symptoms of Gambling Addiction The American Psychological Association reports 10 diagnostic criteria for determining the extent of gambling addiction. 1. Preoccupation. Constantly reliving past gambling experiences or thinking of nothing but gambling. When trading, this may exhibit itself as talking about that one great trade over and over again, or investing too much money into educational products. 2. Tolerance. Needs to gamble with increasing amounts of money in order to achieve the desired excitement. This could be adding more contracts (i.e., overleveraging), trading too many markets, or holding on longer to losing trades than you would expect. 3. Withdrawal. Is restless or irritable when attempting to cut down or stop gambling/trading. 4. Escape. Gambles as a way of escape or to relieve helplessness, guilt, anxiety, or depression. 5. Chasing. After losing money gambling, often returns another day in order to get even (“chasing one’s losses”). Chasing is a classical behavior pattern characterizing pathological gambling. One of the cardinal rules of trading the market is to not chase trades. 6. Lying. Lies to family members, therapists, or others to conceal the extent of involvement with gambling. Time and time again I meet traders who are afraid to tell their wives, friends, and family members that they are involved with futures or forex, or they have blown out their account and are secretly refunding their trading accounts without the knowledge of their wife and family. 7. Illegal acts. Has committed illegal acts (e.g., forgery, fraud, theft, or embezzlement) in order to finance gambling. 8. Risked significant relationship. Has jeopardized or lost a significant relationship, job, or educational or career opportunity because of gambling. 9. Bailout. Has relied on others to provide money to relieve a desperate financial situation caused by gambling. For traders, this typically takes the form of chasing commission rates. 10. Loss of control. – Has made repeated unsuccessful efforts to control, cut back, or stop gambling. If you have five or more of these signs, you are considered a pathological gambler; if you exhibit three or four of these, you are considered a problem gambler; if you exhibit only one or two, you would be called an “at risk” gambler. If there is a one-for-one correlation with trading, my hope is for you to recognize a problem within yourself and seek help if necessary. This information is provided to help, not to be a real psychological evaluation. There are three phases to gambling addiction: the “winning phase,” the “losing phase,” and the “desperation phase.” If you find that your trading behavior is only partially mirroring the behaviors associated with each phase, don’t panic. This information is meant to inform and warn you against spiraling downward. If you completely recognize yourself in each phase, you may want to seek additional help. winning phase 1. Winning phase. During the winning phase, gamblers experience a big win—or a series of wins—that leaves them with unreasonable optimism that their winning will continue. This leads them to feel great excitement when gambling, and they begin increasing the amounts of their bets. 2. Losing phase. During the losing phase, gamblers often begin bragging about wins they have had, start gambling alone, think more about gambling, and borrow money—legally or illegally. They start lying to family and friends and become more irritable, restless, and withdrawn. Their home life becomes unhappy, and they are unable to pay off debts. The gamblers begin to “chase” their losses, believing they must return as soon as possible to win back their losses. 3. Desperation phase. During the desperation phase, there is a marked increase in the time spent gambling. This is accompanied by remorse, blaming others and alienating family and friends. Eventually, the gamblers may engage in illegal acts to finance their gambling. They may experience hopelessness, suicidal thoughts and attempts, arrests, divorce, alcohol and/or other drug abuse, or an emotional breakdown.
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