Can Trading Futures, Forex Or Stocks Be Addictive?

addictiveFutures, Forex Or Stocks Be Addictive?

Real addictions are a very grave matter and while trading doesn’t involve the consumption of any substances, there are those that believe that trading is truly addictive.

The tremendous emotional rushes that most traders experience both prior to placing a trade and while in the middle of a big winner or big loser are an acknowledged part of trading, but are traders truly becoming addicted to trading?

Is there a need for help for traders, or is the situation one where the high percentage of traders that lose money is simply due to them still being in the learning curve and suffering the losses as a normal part of “paying your dues”?

In this article we are going to investigate the matter and determine if there is sufficient evidence to support the hypothesis that trading is indeed addictive.

So what constitutes an actual addiction? There are two categories of addictions, physical dependence and psychological addiction. There is a considerable amount of information on both and certainly beyond the scope of this article, but a brief summary follows

From Wikipedia, the definition of “addiction” includes:

“Psychological addiction, as opposed to physiological addiction, is a person’s need to use a drug or engage in a behavior despite the harm caused [emphasis added] – out of desire for the effects it produces, rather than to relieve withdrawal symptoms. …. it becomes associated with the release of pleasure-inducing endorphins, and a cycle is started that is similar to physiological addiction. This cycle is often very difficult to break.”

Also,

“Psychological addiction does not have to be limited only to substances; even various activities and behavioral patterns [emphasis added] may be considered addictions if they are harmful….”

From Merriam-Webster Online, the definition of “addicted”:

“1 : to devote or surrender (oneself) to something habitually or obsessively”

So an addiction could be described as a person feeling the “need” to repeatedly engage in a particular behavior to satisfy a desire for the emotional effects that is has, the feelings that it produces.

It is a desire that they have rationalized into a need, to which they have surrendered control, and they have allowed the behavior to develop into a habit. This is physiologically compounded by the endorphins released into the system that provide a physical feeling effect as well.

Let’s look at some of the necessary 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 critical practice for profitable trading is good risk management. At the heart if this is making sure that the risks you take are measured and calculated risks.

You want to keep your losses small when they occur and avoid them all together when possible (such as NOT getting into bad trades). Key tools commonly used for controlling potential losses include risk / reward calculations and stop loss orders.

Risk/reward calculations are necessary on every trade so that you know whether each trade is a sound business decision.

Stops are used so that then a good trade is placed but the market doesn’t do what you’d expected. With the leverage in trading that can work for or against you, risk management is essential.

General money 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 management but the focus is on a larger scale and a broader scope, such as looking 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 trouble. There are several common mistakes repeatedly made by traders that bring large losses, missed profits, and ruin for many.

These mistakes run in direct conflict with the known and established good practices for consistent and profitable trading, yet are made over and over again by the same traders.

Since they are repeated, it would be reasonable to say that they have become habits. Let’s examine these habits from the perspective of the emotional response for the individual.

Trading without a plan, also known as entering a trade without an exit strategy for the trade.

The trader doing this is usually not following a technical system and is going more on their hunches than sound calculations.

This right here is an indicator that they are allowing their feelings to dictate their actions more so than their reasoning and rationale.

If the market moves in their favor, it reinforces the decision to follow their intuition and feeds the ego in being right.

Another very elemental factor is suspense. If one has the trade planned out and there are no surprises, it takes all the suspense out of it. Why do people love a good mystery novel or movie?

They love sitting on the edge of their seats and reveling in the suspense of it all. When you know the end of the story it takes all the fun out of it and who wants that?

addictive

Refusal to use stops. The comment often heard by brokers is “No, I don’t want to get stopped out. I’ll just watch it.” This is true for initial stops and quite commonly for trailing stops after the market has moved in one’s favor.

The trader is putting a lot of energy in to their feelings hope and anticipation. The ego is also being fed here, “knowing” that the market will do as they desire.

As the move goes their way, they are experiencing a tremendous thrill, plus the validation they desire about them being a better trader than they truly are.

When the market moves against them, the opposite feelings are amplified and only create a greater need to be validated. This also again, involves a lot of suspense and anticipation.

Over-trading regarding frequency, A.K.A. trading too often. Usually in this circumstance the trader is feeling the need to satisfy their perception of lack.

They may have just experienced a string of losers or a very large loss and now feel that they have to recoup their losses and absolve themselves for the previous errors.

They are feeling bad about themselves and rather than do what they know is right, they simply want to have the bad feelings go away.

Placing trades that are too large for the account. One of the more interesting aspects of this particular mistake is that besides the greed factor, people get a bit of a thrill going against the rules and particularly stepping outside their comfort zones.

The simple act of rebelling or being adventurous is what many got a taste of when they first got into trading and how it is so different from what they’d ever done before.

The new territory has its appeal and stepping out of the norms and standard rules has a strong gratification associated with it. Of course the greed factor is pretty strong here as well.

Only risking 2-5% of your account and the prospect of a measly couple hundred dollars just doesn’t match up with the big numbers one had in mind with trading, or what’s heard often in the ads for the various trading systems available.

When you’re only making $800 on this trade and you see and an that claims “I made $9,700 on my first three trades!!!”, that reasonable profit you made just isn’t very satisfying.

One thing worth pointing out right now, and it directly relates to our subject is the fact that people will make mistakes.

People only knowingly repeat them when there is a problem. If you get up out of bed in the morning and stub your toe on the footboard of the bed, you wouldn’t stand there and keep smashing your toe again and again.

You’d stop, unless of course there was some sort of additional response that was strong enough to compel you to do it repeatedly until your foot was completely mangled.

You’d only smash your thumb when hammering a nail once before you changed how you were holding the board – unless something was wrong.

In comparing the repeated trading mistakes with the established good practices, it is in the emotional responses of the mistakes being made. Suspense, personal absolution and validation, excitement, feeding the ego, being right.

These can be very powerful and provide enough stimulus for the person that it over-rides their better judgment.

The actions involved in the two sets are in direct contrast regarding both the financial results and how they feel to the trader.

Knowing the outcomes for a given trade, keeping the risk small, managing money wisely – these are boring and provide no suspense. Lacking surprise and done with a knowing, good trading provides a much lower emotional confirmation of a traders ability on the emotional level.

When you’re good and you know your good and produce consistent results, those consistent results are not a huge celebration.

When you’re a rookie and you do well, it is much more gratifying, especially if you hit a big one. That’s a huge ego feed.

There is an inverse relationship between the discipline necessary for good trading practices and the emotions involved in unhealthy trading.

The discipline itself runs 180 degrees against the satisfying emotions and denies them to the trader.

That is one of the primary reasons that so many traders struggle with the emotional aspects of trading. It is the way that they are trading.

They are trading in a manner that fuels their emotions, and established poor habits – both active and emotional habits.

If they would focus on establishing healthy trading habits and practices, follow the established wisdoms and observe themselves in their trading, do the simple things that they are supposed to do, their emotions would not flare up so badly and they could begin to break the cycle.

Trading itself is not addictive. There are a great many traders that trade in a healthy manner and enjoy the lifestyle that goes with it.

There are aspects of trading that set the stage for the individual to become addicted to trading unwisely.

So it is not in the activity itself. It is the focus of the individual and the habits that they establish early on in their trading that determines whether or not they become addicted and suffer.

It is up to the individual to be aware of themselves and their practice to safeguard against addiction to poor trading.

Education, assistance and proper guidance would be the best recommendation for traders, and these should be pursued as early as possible.

The longer the habits are in place, the longer it takes to break them and re-establish healthy trading practices.

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Binary Options Worldwide Status

Binary Options worldwideStatus of Binary Options Worldwide 

Powerful finances Intelligence affords you with the state-of-the-art regulatory traits affecting binary options worldwide
 
The on-line trading commercial enterprise is by using its very nature international, reaching everywhere that the net is out there, even if all you’ve got is a mobile phone. 
 
Regulations, however, still tied in your real geographical location, and following all the conditions in each U.S.A. of the arena may be difficult and time-ingesting. 
 
Dealers seeking to intensify to fresh markets internationally, Finance Magnates Intelligence analysts have already completed all the tough work for you and compiled an exhaustive list of binary options policies in all the countries of the arena. 
 
To similarly assist our reader’s technique with this treasure-trove of records, we visualized all of it within the form of regional maps. 
 

Binary Options Worldwide Trading Regulations–the Full Breakdown 

It’s crucial to understand that the prison scenario around binary options remains fluid and at risk of modifications once in a while. 
 
The following maps provide a photo of the market as it’s far in March 2017. Keep following powerful economists to stay updated with the present-day tendencies. 
 
In the predominant market of North America, the state of affairs is honest. 
 
Unlike what some humans believe, retail binary options are a prison for trading inside the US. 
 
 
The handiest restriction being that they have traded on considered one of the accepted exchanges between = NADEX and Cantor Exchange. 
 
In Canada, any firm presenting monetary gadgets accredited through the provincial regulators, however, none of these problems licenses for binary options.
 
Binary Options worldwide 2
 
In South America, no U. S. A. Specifically bans binary options trading. 
 
Buying and selling understood to be flourishing right now in some markets, inclusive of Chile. 
 
In the European Union, corporations that might regulate in one United States of America can use license pass porting (set up underneath MiFID) to facilitate operations in all different nations. 
 
However, a few national regulators positioned restrictions on the alternate, along with France that banned marketing and Belgium that outlawed it. 
 
In the Middle East, Cyprus gives a regulatory framework for binary options that made it into the leading hub in the area and the preferred EU jurisdiction. 
 
In sharp assessment, Israel banned binary alternatives absolutely for locals and is operating on even making the operation of global name facilities unlawful. 
 
Africa offers some of the fastest developing binary options markets but South Africa is the handiest United States of America wherein it explicitly allowed for buying and selling
 
Throughout the Asia Pacific location, binary options face no regulatory hurdles for growth. 
 
However, the regulators of Australia, New Zealand, Hong Kong, and above all Japan have specific frameworks with the aid of which corporations need to abide to gain a license. 

Binary Options Worldwide Overview 

Following up on our famous current function global binary options regulations review, we are proud to give you a detailed breakdown of leveraged foreign exchange guidelines around the sector. 
 
 
We cannot underestimate the significance of having a foreign exchange license nowadays as buyers are more aware than ever about the dangers associated with unregulated companies. 
 
Brokers on their part strongly emphasized, even in nations wherein it isn’t required, what number of jurisdictions they’re licensed in and looking to get greater setup signs and symptoms of approval.
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Trading Copper Futures Commodity

Trading copper futuresCopper Futures Commodity Market 

Copper futures is an interesting asset because is a noticeably flexible metal that can behavior strength and is a necessary hint of mineral in all living matters.

It is much less precious than gold or silver in terms of fee. 

The New York Mercantile Exchange (NYMEX), wherein copper contracts are a traded commodity, states that copper is the third maximum widely used metal in the world. 

They mine it in huge open pits and Chile and the U.S. Have significant reserves of copper that would exhaust within the subsequent 50 years. 

Copper Futures Commodity Market History 

Although copper is a non-precious metallic, it’s miles widely used as a commodity to behavior strength. 

Most of the sector’s electrical and verbal exchange infrastructure depends on the metallic. 

In the innovative country of generation, copper is in regular demand. 

Copper Futures Commodity Market Facts 

One of the primary factors that set copper aside from all different varieties of metals is the fact that copper can establish the economic boom of a specific USA. 

While the state of the copper industry within the particular U.S.A. 

It is expanding, we can take it as an amazing signal that the economy of the same region is increasing. 

Demand for copper has routinely grown in the latest years, consistent with statistics sited through the World Bureau of Metal Statistics. 

Copper consumption elevated by using 8 percent in 2010 for the duration of Asia, for instance. The call for has persevered to climb in the world’s course in recent years.

Europe is the second-largest copper consumer, after China, and slower business hobby has had an instantaneous effect on demand for the metal. 

Copper is the 0.33 maximum fed on metallic in America behind iron and aluminum.

copper futures 2

Copper Futures Commodity Trading 

It standardizes copper futures, exchange-traded contracts wherein the agreement consumer agrees to take transport from the seller a selected amount of copper (e.g. 25 tonnes) at a predetermined charge on a destiny shipping date. 

Investors can alternate Copper futures on the following exchanges: 

The London Metal Exchange (LME). Copper ‘A’ Grade futures prices quoted in greenbacks and cents per metric ton and traded in lot sizes of 25 tonnes (55,116 pounds).

Commodity Exchange: At the COMEX—a member of the CME Group—a preferred copper futures contract represents 25,000 pounds of copper, while the mini-copper futures represent 12,500 pounds of copper. 

These contracts trade Sunday-Friday between 6:00 p.M. And five:15 p.M. (CST). This approach investors can make a play for about 23 hours every day (there is a 45-minute spoil length between each day).

Multi-Commodity Exchange: The MCX offers popular options for copper, each a well-known and mini settlement. 

Standard contracts fall throughout February, April, June, August, and November with contracts representing 1 MT. 

Mini contracts are 250 kilograms of the industrial metallic. 

It bases this exchange in India. 

Glencore faces Zambia’s risk over copper mines. 

Glencore has struggled to make its Zambian business worthwhile, however, the mines are significant to its turnaround plans that still include mines throughout the border inside the Democratic Republic of Congo. 

The organization is in the system of spending billions of bucks at Mopani to sink new shafts; once fully ramped up, it predicts the mines to provide 140K mt/12 months of copper vs. 51K mt/12 months last year.

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Copper Futures Market Review

Copper futures marketCopper Futures Market

The copper futures market is important because Copper is a noticeably flexible steel that can conduct power and is an essential trace mineral in all living things. It is much less precious than gold or silver in phrases of a fee. The New York Mercantile Exchange (NYMEX), where copper contracts are a traded commodity, states that copper is the 1/3 most widely used metallic inside the global. They mine it in massive open pits and Chile and the U.S. Have great reserves of copper that might exhaust in the next 50 years.

Copper Futures Market History 

Although copper is non-precious steel, it’s miles widely used as a commodity to behavior electricity. 

Most of the arena’s electrical and conversation infrastructure depends on the metallic.

In the present-day country of generation, copper is in a regular call for. 

Copper Futures Market Facts 

One of the predominant elements that units copper aside from all different metals is the fact that copper can establish the financial increase of a specific country. 

Whilst the kingdom of the copper enterprise inside a specific us of a is increasing, it could take as a very good sign that the economy of the equal vicinity is expanding. 

Demand for copper has routinely grown in the latest years, consistent with records sited by the World Bureau of Metal Statistics. 

Copper consumption extended through eight percentage in 2010 at some stage in Asia, as an instance. 

The demand has endured to a climb of the arena in recent years. 

Europe is the second biggest copper patron, after China, and slower enterprise activity has had an immediate impact on demand for the metal. 

Copper is the 0.33 most fed on steel in America in the back of iron and aluminum.

Copper futures market 2

Copper Futures Market Trading 

It standardizes copper futures, Trade-traded contracts in which the agreement purchaser agrees to take delivery from the vendor a specific quantity of copper (e.g. 25 tonnes) at a predetermined charge on a future shipping date. 

Investors can alternate Copper futures on the subsequent exchanges:

The London Metal Exchange (LME). Copper ‘A’ Grade futures costs quoted in bucks and cents in step with a metric ton and traded in lot sizes of 25 tonnes (55,116 pounds).

Commodity Exchange: At the COMEX—a member of the CME Group—a standard copper futures settlement represents 25,000 pounds of copper, even as the mini-copper futures represents 12,500 kilos of copper. 

These contracts trade Sunday-Friday between 6:00 p.M. And 5:15 p.M. (CST). This way investors could make a play for about 23 hours every day (there is a 45-minute wreck duration between every day).

Multi-Commodity Exchange: The MCX offers famous alternatives for copper, each a widespread and mini agreement. 

Standard contracts fall in the course of February, April, June, August, and November with contracts representing 1 MT. Mini contracts are 250 kilograms of the economic metal. 

It bases this exchange totally in India.

Below, Copper Futures Contract Specifications:

Contract Symbol Contract Unit Price Quotation
GHG 25,000 lbs cents per pound
Trading Exchange Trading Hours Tick Value
CME COMEX 18:00 – 17:00 (NY) $0.05/lb = $12.50

In the above specs of the Copper Futures Contract, you could see the settlement unit. The tick value and price quotations for a clear buying and selling or transaction in safety mode!

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Protection Against Falling Stock Market

falling stock marketStrategies 2,3 and 4 Against Falling Stock Market

If you have got enjoy with fairness options, you ought to have little trouble shifting your information to options on falling stock market and futures. 

Like equity options, futures options permit buyers with pretty much any time horizon and danger appetite to assemble techniques.

In the earlier segment on hedging with futures, we used an example of a $three,000,000 portfolio requiring the sale of approximately 29 futures contracts for safety towards a destructive downward pass.

Another workable opportunity is to hedge the use of options. 

By shopping for 29 put options, you could shield towards a big lower inside the cost of the portfolio, while preserving your profit potential if the marketplace were to rise.

The purchase of puts as a hedge works much like coverage. You virtually buy the number of puts dictated by using the fast futures hedge ratio calculation.

Means of the choice of the strike charge would determine insurance. 

Higher strike puts might be greater luxurious than lower strike charge puts, however the defensive characteristic of better strike puts will become powerful a lot fasts.

The hedger consequently confronted with the choice of how much protection to take on, and at what cost.

falling stock market 2

Strategy 3: Generate additional profits in a stable or Falling Stock Market–writing name Options

The seller of an E-mini S&P 500 name alternative gets charge (the premium) from the consumer of the choice in return for the obligation of taking a short role inside the futures contract at the exercising price if the choice exercised.

The call writer’s hazard is unlimited, whilst the call customer’s risk restricted and the decision writer’s earnings restricted, whilst the decision purchaser’s income are limitless.

The principal cause to put in writing call options is to earn the premium.

In durations of stable or declining markets, call writing can suggest an appealing cash go with the flow from a small capital funding.

Much fairness alternative buyers acquainted with this strategy, that often referred to as a “covered name” position. 

The hope is that, at expiration, the agreement charge of the futures agreement might be at or underneath the workout fee of the choice.

The option will then expire nugatory–and you hold the entire top rate. 

The top class additionally gives constrained protection in opposition to a drop within the futures charge.

The risk is that the futures rate may decline via greater than the top class gained, and the investor may also enjoy a net loss.

Therefore, this isn’t as effective a hedge as the quick futures or lengthy positioned techniques. 

The appeal, however, is that, depending at the strike rate of the offered calls, the dealer may additionally go away room for the underlying shares to an upward thrust in fee without incurring a loss on the hedge.

Strategy 4: Using collars to hedge your portfolio in a Falling Stock Market

Collars–additionally normally referred to as “fences” or “threat reversals”–combine out-of-the-money call writing with the acquisition of put options with a lower exercising fee.

This strategy gives a few disadvantages safety, however additionally reduces some fee related to buying puts as a hedge.

The proceeds since the sale of the decision option will assist offset the fee incurred from buying the placed, and the net out-of-pocket rate will be much less than if the investor had sold put options handiest.

Collars provide a few degrees of portfolio protection at a low price for foregoing some earnings capability from a marketplace pass to the upside.

Conclusion

Stock index futures and options offer investors several investing and trading opportunities–and in a declining or volatile stock marketplace, they’ll a hedging automobile to assist protect the fee of your stock portfolio.

Although many investment experts use complex hedging and arbitrage strategies, even person investors can use stock index futures and options techniques to earnings in hard markets.

This article gives only a few examples of strategies that could permit traders to insulate portfolios against widespread stock market declines.

Like some other funding, it must base the closing decision of whether or a way to include stock index futures into your portfolio totally upon your private goals and hazard tolerance.

But it’s critical to realize that futures and alternatives techniques like the ones defined in this newsletter are to have to character buyers, and in reality, a growing range of brokers these days permit these products to trade along securities–at the equal platform.

Best of all, now that you recognize more approximately hedging with futures and options, you could pass beyond the frequently over-hyped concept of diversification and remember opportunity strategies of portfolio protection.

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