How to Know if a Day Trader Has a Gambling Problem

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The Internet has made our lives easier in so many ways. Unfortunately, it has also opened us up to certain addictions that were once exclusive to only a few. One of the most insidious of these is gambling addiction among day traders in the stock market.

Because the Internet allows instantaneous execution of stock trades (and instantaneous feedback), it caters to people with poor impulse control, who don't have a chance to take back a bad decision.

This is not to say that all day traders are addicted or that day trading itself is necessarily equivalent to gambling. There are thousands of people who work very hard and are very dispassionate about their day trading. But if you or a loved one has turned a viable livelihood into a gambling problem, it's important to get help before disaster strikes. By learning how to know if a day trader has a gambling problem, you'll be prepared for any eventuality.

The following are some signs that day trading has become more like gambling for an individual than a systematic means of earning a living.

  • Personal relationships will begin to suffer. Pay attention to erratic behavior on weekends or during family vacations, when family or social obligations may be interfering with the person's trading activities. Be on the lookout for lying or negative personality changes.
  • A day trader can have access to very visually stimulating tools, including graphs, streaming news, and real-time trade results. These can give the same euphoric sensation from a personal computer that slot machines can at a casino. Watch for signs that the trader is "playing" solely for the pretty colors and changing stimuli.
  • Be aware of large-scale risk-taking. In order to leverage their funds, most day traders need to borrow money from their brokers, but if this gets out of hand, or if they can't pay the money back, they might have a problem.
  • Day traders with a healthy approach should remain more emotionally level as their trades fluctuate up and down. Wild swings of euphoria and depression may be a sign that the person engages in the activity primarily for the emotional high it produces.
  • Obsessive behavior should be a clue of a gambling-type addiction. If the person's daily life revolves entirely around financial news and the stock markets, it may be that they are unable to separate themselves and can only experience life through the lens of their trading.
  • If the trader has exceeded the maximum borrowing amount from his broker, he might ask family, friends, or third-party lending companies for money. This inability to recognize when he is in over his head is a trademark symptom of gambling addiction.
  • The addicted trader will go out of his way to justify continued trading activity to himself or others, even in the face of failure. Gambling addictions will cause the person to be irrationally optimistic about future trades.

As with many things, it can be hard to tell if a person is just passionate about their hobby or job or whether they have an addiction to it. But if you teach yourself how to know if a day trader has a gambling problem, you'll be in a strong and knowledgeable position from which to offer assistance and encouragement should a friend or family member need it.

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