Women and Men; Mars and Venus
09/14/2005
As I prepare for three book launches - one in Glasgow, one in Edinburgh and one in London for my new book on Women in Business (I know I am not a woman, but my co-authors are and I wrote the 'male bits' over the past 3 years!) I think about how men and women trade differently. One such difference is men are more likely to be addicted to trading.
Could it be that some people are simply addicted to trading? Several websites are dedicated to recovering "traderaholics". Even professional traders suffer from it.
Nearly 15 million Americans have gambling addiction according to a 1997 study by Harvard Medical School. An equivalent UK proportion would be 4m people.
In 1999, the North American Securities Administration Association (NASAA) released a study into the most active of trading, day-trading, noting only 11.5% make money. If winners are few, the addicts are not amongst them. Stock market gamblers contacting the not-for-profit New Jersey Council on Compulsive Gambling had losses of $50,000 and $250,000 compared to $38,000 average debt of casino addicts.
During the six weeks following the October 1987 crash 44% of the calls to US based '1-800 GAMBLER' helpline were from traders.
The problem can be more serious than merely debt. This year will be the 6th anniversary of when online trader Mark Barton, suffering massive market losses, walked into two US brokerages offering online trading, and killed 9 people, then himself.
So what does addictive online trading involve? The authoritative Diagnostic and Statistical Manual of Mental Disorders, provides criteria for diagnosing pathological gambling. The more of the following criteria that are met, the more serious the problem.
- Excitement. Online trading addicts do it for the excitement not the money. They need to trade with increasing amounts of money to achieve the desired excitement. However, professional traders, for instance those interviewed in my The Mind of a Trader emphasise good trading should neither involve excitement at gains or pessimism at losses.
- Preoccupation. Addicted traders often find trading "took up all their time." However, professional traders talk about their ability to 'switch off' outside work.
- Loss of control, exhibited by repeated unsuccessful attempts to control their trading. Certainly addicted online traders will be unable to stop until all money was lost and huge debts incurred.
- Chasing losses. As an addicted online trader loses more and more money, the urge to get it back becomes increasingly powerful. The very nature of that desire requires active daily trading. The addict will be rapt by the memory of a "big win," when their gambling paid off. They use this memory to justify continuing to pursue their losses.
- Irritability when trying to cut down their trading. Traders deprived of their computer screen or attempting to "cold turkey" can experience withdrawal typical of other addictions.
- Escapism. Trading online to escape other problems.
- Lies to conceal the extent of involvement with trading. Dishonesty is a trademark of addiction.
- Jeopardising a significant relationship or job because of trading. A particular lesson here for those trade at work.
Value-Growth
On my value growth criteria which are based on stocks meeting revenue and profit growth and good value based on criteria such as price earnings growth, the following names come up. Remember they are for a 6 month outlook: Vp, Michael Page, Astra Zeneca, Peel Hotels.
Remember I am targeting about 20-20% with the value growth criteria. Last year it produced 33% return. On my momentum value indicator I have Imprint, Homeserve, Connaught, Brambles.
Crazy Small Stock
These are high risk volatile stocks which could move sharply higher or move sharply lower in my view, but will almost certainly not stand still. Names on the radar include: Highway Capital, Worthington Group, Anglesey Mining, Latchways.
Also, if you would like a free multi-media CDROM on 'Investing Better', which covers spreadbetting, CFD trading and momentum indicators like the MACD, posted to you then drop me an email with your postal address to alpesh@tradermind.com.
Spreadbetters
Spreadbetters and futures traders often look at hard and soft commodities. Here's my quick take on the action for the week ahead:
- Oil: Down
- Copper: Sideways
- Gold: Sideways to lower
- £/$: Sideways
- Dow: Down
- FTSE 100: Down
- Soyabean Oil: Sideways
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