The Ultimate Guide to Day Trading Addiction and Recovery

There was once a time when the only individuals who day traded were those who worked for large financial institutions, brokerages, or trading houses.  Today, with the rise of online trading platforms, day trading has become increasingly popular among retail investors.  Online exchanges and mobile trading apps have made trading incredibly easy, accessible, and free.  While these developments have been incredibly positive in many ways, there have of course been drawbacks.  For some, day trading has become a fun hobby, a way to earn some extra income, or even a lucrative career.  For others, it has led to financial loss, and in extreme cases financial ruin, severe depression, separation or divorce, and day trading addiction.


What Is Day Trading Addiction?

Day trading addiction involves the continued uncontrolled practice of buying and selling financial instruments.  Examples of some of the most commonly traded financial instruments include stocks, bonds, commodities, futures contracts, options, mutual funds, ETF’s, and currencies (i.e., Forex).  Additionally, cryptocurrency trading (such as Bitcoin or Ethereum) has grown to be highly popular among day traders, and is notably addictive due to its volatility and 24/7 trading hours.

Regardless of the type of instrument being traded, individuals with a day trading addiction have a preoccupation, obsession and compulsion to buy and sell assets to the point where the individual’s day-to-day life becomes impaired.  Individuals with a day trading addiction will continue to trade even when they know it is causing them problems in areas of their lives such as their careers, their relationships, or their mental and physical wellbeing.

Consequences of excessive day trading include but are not limited to financial loss, educational or career problems, mental health issues such as depression, anxiety or ADHD, physical health issues, deterioration of relationship, neglect of personal hygiene, sleep issues or insomnia, failure to perform responsibilities, and other life problems.  In extreme cases day trading addiction can lead to suicidal ideation and ultimately suicide.  If you or a loved one are experiencing suicidal thoughts call 988 or 911 immediately.

Day trading addiction is considered a subset of gambling addiction by most experts, and falls on a spectrum from mild to severe.  Day trading addiction can also be referred to as problematic day trading (when continuous day trading results in a life problem), binge day trading (when excessive day trading is isolated to certain periods of time be it weeks or months apart), compulsive day trading, or pathological day trading.

It is not only day trading itself that has been increasing and problematic, but many of the behaviors associated with trading as well.  For example, this may include excessive technical analysis of asset charts and indicators, superfluous attempts at understanding market fundamentals, constant checking of price action or positions, or exorbitant research of market sentiment via news, social media, online forums or other sources.  Day trading and all related activities completely engulf the life of an individual addicted to day trading as it becomes the primary area of focus and interest for that individual.

Day trading differs from investing in that investors buy assets for long-term holding, thus posing less risk for adverse consequences compared to buying and selling assets on a weekly or daily basis, sometimes numerous times per day.  Although investing in financial instruments also poses psychological risks, it has less propensity for addiction than day trading.  Nonetheless, it is worth noting that investing in the stock market, cryptocurrency, Forex, or any other financial instrument can still be problematic and addictive.

Why Do People Get Addicted to Day Trading?

Anyone who engages in day trading is vulnerable to day trading addiction, but those with a history of addiction in their families are more likely to develop an addiction than those who do not have a history of addiction, be it with alcohol, drugs, or any behavioral addiction.  Those with underlying mental health issues such as a personality disorder, depression, anxiety, or ADHD are also more prone to develop pathological issues with day trading.

Day trading addiction centers in the brain as changes in the brain’s structure and function cause cravings, changes in mood, and changes in behavior.  Day trading is highly addictive as a result of increasing the release of pleasurable neurotransmitters in the brain such as dopamine.  Every time a trader makes a successful trade, or even opens a trade or witnesses the price going in the direction of their trade, the brain releases feelings of pleasure that the individual begins to crave.  Eventually this can result in the individual trading compulsively and becoming reliant on such stimulation to induce pleasure.

As with all addictions, day trading addiction is a multifaceted issue.  Beyond the brain, online trading platforms are designed to entice people to trade and be engaged in their trading.  In other words, the developers of trading platforms have a key goal of designing the platform to be as enticing, exciting, and visually appealing as possible.  This is sometimes referred to as the “gamification” of investing.  The user experience ends up sometimes feeling more like playing a video game than like trading real money.  While this can be more fun, it can also result in individuals investing real money in a frivolous way and being much more engaged in their trading than they might be otherwise.

There is also excitement and thrill in trading.  Although dopamine is primarily released during a winning trade, whether it be via a long trade when the price goes up or a short trade when the price goes down, the body is still producing adrenalin and endorphins even when one is in a losing trade.  Surveys show that while the vast majority of individuals trade because they want to win money, many also do it for the excitement.  It can be a form of entertainment to fend off boredom.

One fundamental factor in how addictive day trading might be is how frequently an individual can place a trade.  With online exchanges and trading apps, individuals can trade as frequently as they would like while markets are open.  Again, this is why cryptocurrency trading is at increased risk for addiction, because the crypto market never closes.  Individuals may also turn to foreign markets or other methods of trading that allow them to trade at any hour of any day they choose.  Accessibility is constant and is literally in one’s pocket, making the availability and opportunity to place a trade incredibly easy, and subsequently prone to excessive trading and eventually pathological trading.

Another aspect that makes day trading addictive is the “illusion of control.”  Day traders often feel that they have an advantage in trading because they know something that others don’t.  They have done their research.  They have analyzed charts exhaustively, read online forums, heard a secret tip, or have given much consideration to other speculative measures.  They may be proficient in swing trading, arbitrage, or trading the news.  Regardless of the mechanism, day traders often feel they have an advantage, or what is known as the “illusion of control.”  This belief makes traders more willing to take greater risks and engage in trading more frequently.

A concept known as “loss aversion” is a further reason individuals may become addicted to day trading.  Day traders are more emotionally attached to their losses than they are to their wins, even when they are of the same value.  An individual may be tormented by a $50,000 loss but be only mildly responsive to a $50,000 win.  The preoccupation with losses results in “loss aversion” where the trader will tirelessly try to win back their loss, a phenomenon known as “chasing a loss.”

There are many other reasons why people get addicted to day trading, and the above information is far from exhaustive.

What Are Some Risk Factors of Developing a Day Trading Addiction?

Although most individuals who day trade or invest in the stock market, Forex, cryptocurrency or other assets will never develop a day trading problem, some factors are more associated with compulsive day trading than others.  These include but are not limited to:

What Are The Signs and Symptoms of Day Trading Addiction?

Those who have a problematic relationship with day trading are likely to progress in their addiction without an awareness of their issue and a desire to stop, or an intervention of some sort.  As such, it is important to recognize signs and symptoms of day trading addiction in order to address the issue immediately before it gets worse.

Specifically, some signs and symptoms of day trading addiction may include:

What Is The Impact Of A Day Trading Addiction?

Day trading and investing in the stock market, Forex, cryptocurrency, or other assets can result in significant distress and impairment well beyond mere financial loss.  The impact of a day trading addiction will vary from individual to individual.  Some may experience relatively minor consequences in one particular area of their life while others may experience severe consequences in many areas of their lives.

Even in cases where the negative impact of day trading may appear to be insignificant or isolated, an awareness of a problem is indicative that this is something worth paying attention to.  This is especially true since day trading addictions tend to progress in severity over time when they are not addressed, and that when problematic day trading is intervened upon early it is much easier to manage and treat.

Some common ramifications that result from pathological day trading include but are not limited to:

What Can I Do If I Have A Day Trading Addiction?

The first step to addressing a day trading addiction is awareness that day trading is problematic for you and a desire to change our behavior.  With awareness and desire established, there are certain steps you can take to moderate trading or abstain from trading altogether.  Attempts at moderation often work best with a period of abstinence for at least 4 to 12 weeks.  Practical steps for working towards abstention are:

If day trading is excessive and causing impairment, and if an individual is unable to moderate or abstain from day trading on their own, professional help from a day trading addiction specialist is recommended.

What Is The Treatment For Day Trading Addiction?

Day trading is not yet officially recognized as an addiction, and the scientific literature on the topic is minimal.  Very few studies have been conducted on addiction among day traders, let alone treatment modalities for day trading addiction. Nonetheless, studies that do exist in conjunction with similarities to pathological gambling inform what is currently known with regards to assessment, diagnosis and treatment of day trading addiction.

Day trading addiction treatment may include behavioral modification therapy or Cognitive Behavioral Therapy (CBT).  This method of treatment helps individuals deal with obsessive, negative and destructive thought patterns and feelings that impact their behavior.  Behavioral therapy may be used to teach skills to reduce the urge to day trade.  Many also benefit from family therapy as part of the recovery process.

In some cases medication may be used as part of the treatment approach if deemed to be necessary and beneficial. Antidepressants and mood stabilizers may help problems that often coincide with day trading addiction such as depression or anxiety.  Studies also reflect that medications such as antidepressants or narcotic antagonists may be effective at reducing the behavior to engage in day trading.

Holistic methods can also be incorporated into treatment to help the entire person heal both physically and psychologically.  Holistic methods may include an emphasis on nutrition, physical activity, meditation, yoga, sound therapy, hypnotherapy, breathwork, and experiential therapy or nature therapy to name a few.  There is also an emphasis on building life skills and incorporating structure and routine into the lives of those in recovery.

Depending on the severity of the day trading addiction, individuals may be treated on an inpatient or outpatient basis.  Inpatient treatment offers 24-hour live-in care in a structured and supervised environment while outpatient treatment offers individuals treatment while they live in their home and are able to go about their day-to-day lives.  Inpatient treatment typically lasts for 30, 60 or 90 days while outpatient treatment typically lasts for 3 to 12 months.

Additionally, depending on the severity of the addiction and the goals of the individual in collaboration with their gambling addiction expert, one may explore abstinence-based approaches versus moderation management approaches to treating pathological day trading.  As mentioned, moderation management approaches often have a period of abstinence at the onset of treatment.

Day trading addiction experts are scarce, and are most commonly treated by mental health professionals that specialize in gambling disorders.  Examples of such mental health professionals may include a licensed therapist, psychiatrist, or psychologist specializing in compulsive gambling.  Some individuals may also benefit from working with a day trading addiction recovery coach, or a recovery coach specializing in gambling addiction.  Wilderness therapies have also become an appealing alternative to conventional treatment modalities.

What Role Does Family And Friends Play In Day Trading Addiction Recovery?

Family and friends can play a crucial role in the recovery of their loved ones.  It is important for family and friends to engage in their own self-care or method of treatment so that they do not become overwhelmed or burned out with their loved one’s problematic behavior, and learn to set healthy boundaries so that they refrain from co-dependent or enabling behaviors.  Engaging in one’s own help and establishing a healthy lifestyle will model recovery behavior to your loved one.

Family and friends should also learn to communicate effectively, which includes learning to listen to their loved one’s needs or concerns.  Family therapy or family coaching for day trading addiction can be very helpful, especially in early recovery or even when their loved one is resistant to treatment or in denial of their problem.

In addition to professional help from a day trading addiction professional for friends and family, or in lieu of, family and friends may benefit from attending mutual help groups such as SMART Recovery Family & Friends or Gam-Anon Family Groups.  Such meetings are free, and can be found locally in your community or virtually worldwide via their respective website.

Family and friends of a loved one suffering from compulsive day trading should also take some time to learn about underlying causes of day trading addiction, signs of day trading addiction, and methods of treatment for day trading addiction.

For more information on day trading addiction and recovery please read Family Addiction Specialist’s Cryptocurrency, Day Trading & Gambling Recovery service page.

For more information on day trading addiction treatment and to find the best day trading addiction counselor near you, or for general therapy and mental health counseling, or to inquire about Family Addiction Specialist’s private concierge sober coach services, recovery coach services, sober companion services, addiction therapy services and/or teletherapy services (online therapy/virtual therapy) for drug addiction, alcohol addiction, gambling addiction, cryptocurrency addiction or other forms of digital addiction and technology addiction please contact Family Addiction Specialist’s undisclosed private therapy office in the Upper East Side of New York City today at (929) 220-2912.  Family Addiction Specialist serves clients in Manhattan and the surrounding NYC area, as well as concierge or virtual services worldwide.

Lin Sternlicht & Aaron Sternlicht

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