Excessive Trading – is it a gambling Disorder?

The stock market is in a volatile state, no thanks to the current pandemic. For some, it’s time to jump out from the moving train. For others, its merely an opportunity to invest more in it. Whatever stand you take, reading most of our articles might have had you questioning some of your actions. Now, you want to the correlation between excessive Trading and compulsive gambling. That is precisely what we will be highlighting in this article.

Buying while in the dips and selling at the peaks have always been the M.O of the industry. But just like every other thing, where does one draw the line. When does Trading on stocks become a form of gambling? And is it possible for one to develop an addiction from ‘overdoing’ it?

First of all, it’s important to note and explore the behavioral differences between the two leading players in the market – the Day Traders and the Long-Term Investors.

The Day Time Traders

The day time traders feed off the short-term payoff. They approach the industry with a unique mode of operation. Unlike the long-term investors who like to play the waiting game, day time traders want to rip the reward. They follow the whims of the market and are reactionary to the market movement. Day time traders invest with the mindset that the market never lies.

Day trading provides short-term profits, and nothing more. The stock market provides them with little in terms of long-term benefits. This is why day trading shouldn’t be dabbled if the person in question can’t handle high risk because let’s face it, short-term Trading isn’t a ‘sure game.’ The uncertainty of getting profit from it makes it a lot different from the Long – term trades. Those who still trade in this market are known as Day Time Traders.

They are traders and investors. Day time traders don’t invest in the long-term, and one can view this form of Trading as a means of generating cash flows, more like your side hustle. It is safe to say at this point that understanding gambling can apply to the business of Trading. Its a new business where you get to link markets from around the world and meet investors with different business ideologies, strategies, and backgrounds.

Long-Term Investors

Just as we’ve rightly stated, long-term investors tend to see the stock market as a marathon. They are more focused on long-term results. For most investors, this implies developing an investment plan with the help of a financial planner or by only doing it on their own. The financial planner will take into cognizance the investor’s goals and comfort level regarding the risks that will be made.

With long-term Trading, there is a high level of research involved. One must first understand that long-term investment is more of a marathon race rather than a sprint. These types of investors know that the stock market prone to instability and will not experience an original market price. For instance, the current Covid-19 pandemic affected the economy, and all traders felt the implications. Meanwhile, a long-term trader has made plans for that too. How do they do that? More often than not, these traders usually leave their stocks to ride with the wave.

When Trading becomes a gambling addiction

Trading, just like gambling, gets you intoxicated. It also evolves to a compulsive fear of not losing, and then morphs into an addiction. It starts out as a secret. One of the similarities between day time trading and gambling is the secrecy. Most traders get sick, no thanks to the secrets they keep. It starts with a little lie, then denial sets in. But how can Trading be tagged as a form of addiction? As it goes, traders sit right in front of their computer for an extended period of time, staring at their trading platforms, and becoming hypnotized by the fluttering candle-like movement. As a wise man once said, “Every tick represents the greed and fear of millions of traders that time.” For someone that invests his time in trading off human emotions, you start to wonder what goes on in their mind? The need to get it now, because they feel the price is slipping away from them overwhelms their mind.

It is a physical sickness

Losing makes you feel bad and worse…it makes you ill. Novices are thought to trade with one resounding phrase, “keep your capital,” but they don’t because they believe that having been taught to buy, they’ve willed the magic wand. They end up chasing the wrong tail, and after losing countless times, the mindset switches to that same thing we’ve talked about for so long, trying to get even. What do you expect when you throw good money after bad? You never earn it back.

Signs that your Trading is morphing to addictive behavior

What is gambling? When you stake something on a contingency, it is called gambling; that definition doesn’t cater to what it genuinely presents. It takes on a much more complex dynamic than that. Many traders are walking into the dark tunnel of gambling. Traders fall into the gambling trap and develop and gambling habit unknowingly. Investing in an industry that revolves around financial transactions without a concrete understanding is gambling. When you trade without doing the diligent work, and qualitative research can be based on pure luck.

Regardless of what your investment portfolio is, if it has you staying up at night every time, or if you are making unnecessary trade, you might be developing an addiction to Trading, and this is not where you want to be mental. The sooner you become conscious of this behavioral pattern, the sooner you can easily snap out of it, seek help, and change for good. Gambler addicts who don’t seek advice die broken, excessive Trading also comes with such consequences – you don’t need that.