I’m sure a lot of us are very passionate about forex trading, but you have to know that there’s a fine line separating this from addiction.
You see, it’s hard to tell the two apart because both passionate and addicted traders can perform well.
What differentiates them is that passionate traders are able to sustain their success without sacrificing other aspects of their lives. Those who are simply addicted to trading undergo extreme highs and lows that take a mental and emotional toll.
Because of the obsession with the markets and fear of failure, a trading addiction can wear out one’s personal life and possibly lead to financial ruin.
So how can you tell if you’re just passionate about trading and avoid getting addicted to it?
First, here are some questions you can ask yourself:
- Do I often find myself still trading even after I have told myself to stop?
- Has trading created problems in my relationships with other people?
- Has trading caused me financial problems?
- Have I ever been told that I’m trading too much and that I should stop?
- Do I consider myself a big risk-taker, betting more than what 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 more intense than the feeling of satisfaction I get from winning?
If you’ve answered yes to all or more than half of these questions, you might be crossing over to the dark side!
It’s not the end of the world, though, so take a deep breath and relax.
You can still turn this into what authors Brad Stulberg and Steve Magness of The Passion Paradox refer to as harmonious passion.
This pertains to having a mastery mindset in which you engage in an activity for its intrinsic rewards.
As a trader, this means enjoying the process of watching the charts, observing price action, analyzing economic data, journaling your trades, and taking steps towards improvement.
This also means that you are not purely motivated by the prospect of making bajillions or crippled by the fear of losing.
Here are some ways you can go about developing a harmonious passion for trading:
1. Focus on the process more than the profits.
Sure, keeping a running total of your wins and losses is necessary in tracking your trading performance, but remind yourself that this isn’t the be-all and end-all of the endeavor.
One of the pitfalls of focusing too much on profits is that you can wind up getting frustrated frequently if you’re not hitting your goals.
This could make you disregard your trading plan and lose sight of the progress you’ve already made.
Practice makes progress, remember?
2. Be patient.
Of course this is much easier said than done, especially when you’re seeing plenty of chances to make money in the markets.
Not only does being patient apply to waiting for the right opportunities to take a trade (a.k.a. high probability setups), but it also means being kind to yourself when make mistakes or snag losses.
Don’t beat yourself up, you’re only human after all! Besides, market movements are entirely out of your control. It’s how you react to it that matters.
3. Set capital limits.
Whether it’s capping your screen time or setting a maximum trading loss per day, you should always know when to stop.
Having a defined percentage of your account as your loss limit can preserve your capital and your sanity. It will also keep you in control of your emotions and trading decisions.
Similarly, it also helps to have a certain number of hours dedicated to watching the markets and your open positions. That way, you can allocate the rest of your day to spending quality time with your family or enjoying a hobby.
Don’t forget that your brain could use a break every now and then. Taking regular breaks (or a long vacation if needed!) can give your mind enough time to recover from market stress and return to trading refreshed and more alert.