Blog of Personal-finance-info.org

Real obsessions are an exceedingly grave matter and while trading does not involve the consumption of any substances, there are the ones that accept that trading is actually addictive. The amazing emotional rushes that most traders experience both before placing a trade and while in the middle of a big winner or enormous loser are an acknowledged part of trading, but are traders actually becoming dependent on trading?

Is there a need for help for traders with Forex broker, or is the situation one where the high proportion of traders that lose money is simply due to them still being in the learning process and suffering the losses as a standard part of “paying your dues”? In this article we’re going to analyze the problem and establish if there’s satisfactory evidence to support the conjecture that trading is indeed addictive.

So what comprises an honest to goodness obsession? There are two classes of obsessions, physical dependence and mental addiction . There is a considerable amount of info on both and actually beyond the remit of this piece of writing, but a short summary follows

So an obsession could be described as a person feeling the “need” to frequently engage in a specific behaviour to satisfy a wish for the emotional effects that’s has, the feelings that it produces. It’s a desire that they have rationalized into a need, to which they have surrendered control, and they have permitted the behavior to progress into a habit. This is physiologically made worse by the endorphins released into the system that offer a physical feeling effect as well . Let’s look at some of the essential practices ( behaviors ) of trading to achieve consistent profits and some of the behaviors exhibited by many traders and see if they fit the above.

One recognized urgent practice for profit-making trading is good risk administration. At the heart if this is making absolutely certain that the hazards you take are measured and calculated risks. You need to keep your losses small when they happen and avoid them all together when possible ( such as not getting into bad trades ). Key tools typically utilised for controlling likely losses include risk / reward calculations and stop loss orders. Risk / reward calculations are obligatory on each trade so you know whether each Forex trading trade is a sound business call. Stops are used so that then a good trade is placed but the market doesn’t do what you’d anticipated. With the leverage in trading that will work with or against you, risk management is important.

General cash management is another critical practice to make sure that your trading business will still have the doors open months and years from now. It includes risk handling but the focus is on a larger scale and a broader scope, for example having a look at what percentage of your available capital you are placing on any given trade, regardless of the details of the specific trade.

These practices may appeal to the intellect, but how they feel is where traders get into difficulty. There are several common mistakes regularly made by traders that bring giant losses, missed profits, and ruin for most. These errors run in direct fight with the known and established good practices for consistent and worthwhile trading, yet are made repeatedly again by the same traders. Since they’re repeated, it would be reasonable to claim that they became habits. Let’s examine these habits from the viewpoint of the emotional response for the person.