NYT: Trading like drug high

Brain images of drug addicts who are about to take another hit are indistinguishable from those of traders who are making money and about to place another trade. “That tells us pretty confidently that if you make money and make money again,” Mr. Zweig said, “it is very similar to a chemical addiction and it becomes very hard to let go.”

However, unlike the next hit on a crack pipe, the next trade is not always a reward. And if you’re making money trading, why wouldn’t you want to keep doing it? How is that kind of buzz different from say, driving a sports car car fast or being active in a tumultuous political campaign?

I was a precinct captain for Clinton in ’92 and the final weeks of that campaign with the resultant deposing of an incumbent president was like being on cocaine. It took me a week to come down. I’ve also felt the same buzz after working for months on large antiwar protests when tens of thousands showed up.

Currently I’ve been trading stock options and, of late, been making consistent money doing so. Back in the 60’s I had a nasty meth habit for a while. Sure, it feels good to make a winning trade, but I have to disagree with the researchers, it’s quite different from taking that next hit.

Successful traders generally have a methodology that works for them and operate under risk parameters they’ve set for themselves. This is a whole lot different from uninformed speculation by the reckless, which may well be quite a lot like playing the slots in Vegas or looking for the next drug high.