Can You Become Addicted to Investing?

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The internet and low-cost trading apps have completely revolutionized the investing industry. Today, any investor can buy or sell stocks (or other assets) right from their phone in seconds and often without paying any fees.

This democratization of the stock market has led to many retail investors looking to take more of an active role in their investment choices. In fact, there are more retail investors involved in trading today than ever before in history.

But could the existing nature of self-directed investing also lead to addictive-like behavior? Is it possible to become addicted to investing? Here’s what you need to know about the evidence for investing addiction and its warning signs.

Can You Become Addicted to Investing?

Yes, studies have shown that it’s possible to become addicted to investing, but this seems most common for short-term traders. Trading addictions can develop after a trader enjoys a few small early wins. Winning these small trades will activate many of the same pleasure centers in the brain as are engaged during gambling.

These early wins can lead to a feeling of invincibility and a strong desire for more. Eventually, traders can spiral into pathological trading, which is defined in Addict Health as a progressive loss of control over trading, tolerance, and withdrawal symptoms similar to the symptoms present in substance use disorders.

Researchers have only recently begun paying attention to the existence and harmful effects of trading addiction. In addition to the 2016 Addict Health study referenced above, a study funded by the French Health Ministry was published in 2017.

While current research has focused on trading, long-term investors could be susceptible to addiction as well. If you’re spending day and night obsessing over the stock market and the performance of your investments, you may be becoming addicted to investing.

What Are the Signs of Investing Addiction?

The researchers who conducted the 2016 study of pathological traders identified 13 behaviors often exhibited. We went through their list and were able to condense it down to five telltale signs of investing addiction.

1. You’re Spending Increasing Amounts of Time and Money

When you’re addicted to investing, you’re constantly needing to do or spend more to get your investing high. You may have started by saying that you would only allocate 5% of your portfolio for trading, but soon you talk yourself into increasing the percentage to 10%, then 20%, and so on until your entire portfolio is invested in short-term plays.

Addicted traders will also spend increasing amounts of time researching stocks, watching the market, and executing trades. For example, you may originally plan to spend an hour a day on day trading or setting up swing trades. But it begins to consume more and more of your day, even pulling you away from your work and family responsibilities.

You may also begin to increase your risk more and more over time. For instance, you may start by trading growth stocks before moving to penny stocks and then moving to leveraged assets like options, futures, forex, and inverse ETFs.

2. You’re Ignoring Your Trade Plans

It’s important to have a well-defined trade plan in mind before you open any position. The most successful traders know exactly when they’ll close out profits and cut losses and they stick with the plan no matter what.

However, addicted traders find that they're getting too caught up in the emotional highs or lows of winning and losing trades. Holding on to a winning position too long can cause profits to quickly evaporate. But, even more dangerous, is holding on to a losing position (known as bag holding), which can lead to devastating losses.

Sending through your stop orders as soon as you open your position is usually the best move.

That way your positions will be closed automatically (with no emotion involved) once your profit targets or loss limits have been reached.

Related: 9 Ways to Avoid Emotional Investing

3. You’re Chasing Your Losses

Chasing losses is a gambling term for trying to quickly win back gambling money that you just lost. With each game, the gambler raises the stakes higher in an effort to make up all their losses at one time.

In the trading world, chasing losses is a bit different than bag holding. With bag holding, the trader refuses to close a current losing position. But with loss chasing, the trader is trying to make up for the previous losses by taking an even bigger or riskier position.

For example, let’s say that you have $30,000 in your trading account and you’re committed to never taking a position size that is larger than 3% of your total assets ($900). You also make a plan to exit any position that reaches a 5% loss.

Your first $900 trade loses 5% ($45) and you close your position as planned. But on the second trade, you ignore your plan and take a $1,000 trade, hoping to quickly make up for our losses. That trade also loses 5% resulting in a loss of $50. And with each bad trade, your position sizes (and losses per trade) grow ever larger.

In severe cases, this pattern of chasing losses can lead to traders allocating large percentages of their portfolio to individual trades. And, when those trades go against them, it can result in massive losses in a short period of time.

4. You’re Hiding Your Investing Activity From Family and Friends

Are you investing in secret so your significant other, parents, or others won’t know? If so, that’s a telling sign that you may be struggling with an investing addiction.

Both studies referenced earlier say that many of the addicted traders they examined not only tried to hide their investing activity from their loved ones but would lie to conceal the extent of their involvement with trading.

The study also found that traders often demonstrated selective memory when discussing their investments. In other words, they’d be sure to magnify the wins while minimizing the losses or never mentioning them at all.

5. You’re Investing With Borrowed Money

Research has found that pathological traders often borrow money from friends and family to fund their trading habits. It’s also common for them to borrow money from their broker by trading on margin.

Trading with borrowed funds is highly risky as leverage amplifies losses and profits. And, in the case of margin trading, you’ll be charged interest on the borrowed amount until it’s repaid and you could end up losing even more money than you invested.

Using debt to pay for investments is not only dangerous financially, but also emotionally. Investors who go into debt often feel incredible guilt for their actions. And, sadly, the Addict Health study warned that this immense guilt can even lead to suicidal ideation.

Recently, a 22-year-old trader died by suicide because he thought he had a negative brokerage balance of over $700,000. In reality, he may not have owed any money at all. But this heartbreaking story sheds light on the immense pain traders can experience when they feel overwhelmed by trading debts.

What Should You Do If You’re Addicted to Investing?

If you’re worried that you may be developing an investing addiction, start taking a break from investing altogether. Perhaps you could make a commitment to step away for a week to detox and clear your head.

If you still feel like you’re struggling to keep your trading under control after your break period, you may need to stop active trading completely. Your personality may simply be more suited to long-term, set-it-and-forget-it investing in ETFs or index funds.

If you’ve repeatedly tried and failed to break your unhealthy trading habits, it may be time to seek out help. You can search the Association for Addiction Professionals (NAADAC) directory to find an addictions counselor near you. But if you need help now with thoughts of suicide, please call the National Suicide Prevention Lifeline at 1-800-273-8255.

Finally, you may want to talk to a financial advisor who can help you build a long-term financial plan to grow and protect your investments. Personal Capital offers teams of fiduciary advisors. Or if you want to find a licensed and qualified financial advisor near you, you can use an advisory directory such as Paladin Registry or SmartAdvisor.

Learn More: Best Online Financial Advisors

Bottom Line

It can be hard to determine when an investing hobby has moved into the addiction territory. But the sooner you take preventative measures to stop a developing investing addiction in its tracks, the better.

If you’re worried that you’re becoming addicted to investing, avoid isolating yourself from others as this can cause downward spirals to quicken and intensify negative thoughts. And if you want more accountability and support in sticking with your investing plan, consider hiring a fiduciary financial advisor.

Clint Proctor

Clint Proctor

Clint Proctor is a freelance writer and founder of, where he writes about how students and millennials can win with money. When he's away from his keyboard, he enjoys drinking coffee, traveling, obsessing over the Green Bay Packers, and spending time with his wife and two boys.

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