FX trading can offer the potential for large returns, but excessive trading also carries the risk of losing funds. In particular, a psychological condition called “impulse trading” can impair a trader’s sound judgment and lead to significant losses. This blog will provide an in-depth explanation of the symptoms, causes, and countermeasures for impulse trading. You can learn key points to avoid falling into impulse trading and gain insights on how to achieve stable profits.

What is Position Addiction?

Main Characteristics of Position Addiction

• Always trading
  In order to achieve stable results in the world of investment, a strategy is necessary, but if you have position addiction, you will repeat trades without basis and frequent entries.

  
  

• High-frequency trading
  You may trade repeatedly all day long, sometimes performing dozens or hundreds of trades. This increases unnecessary costs and losses, resulting in poor performance.

  
  

• Thinking to recover losses
  Trying to recover losses from failed trades by taking on unreasonable positions can lead to further losses. This also increases mental stress.

  
  

• Psychological impact
  A typical symptom is the impulse to “keep watching the charts” or being so concerned about the unrealized profit and loss that it affects your daily life. In such a condition, you may not be able to concentrate on work, so caution is needed.

  
  

Symptoms You Should Know

To confirm position addiction, it is important to pay attention to the following symptoms:

• Unconsciously making trades You may find yourself making trades without realizing it.

  
  

• Being overjoyed or upset by trading results You often react excessively to small wins or losses, and your emotions influence your trades.

  
  

• Prioritizing the enjoyment of trading Sometimes you may feel that trading is enjoyable even when there are no results.

  
  

Position addiction is a psychological state that needs to be overcome in order to achieve stable profits. Traders need to understand the risks brought on by this condition and carefully review their trading style.

1. Tendency Toward Overconfidence

Traders with strong overconfidence tend to ignore risk in their pursuit of profit. They often disregard advice and opinions from others due to their confidence in their own judgment. This leads to a tendency to hold positions, making it difficult to take action for self-improvement even when losses continue.

2. Fixation on Short-Term Profits

Traders who fixate on short-term results are also prone to being overly optimistic. In their pursuit of momentary profits, they often overextend their positions and repeat trades lacking sound judgment. Ignoring sudden market fluctuations and being misled by temporary success is dangerous.

3. Information Overload

When traders are faced with an excess of information, it becomes difficult to make accurate judgments. Particularly susceptible traders, amidst a flood of various opinions from social media and forums, tend to frequently change positions and take unnecessary new ones. As a result, they often lack composure.

4. High-Stress Living Environment

A stressful environment can encourage a positive-positive mindset. Everyday stress damages mental health and diminishes composure during trading. Issues with work or relationships can influence emotional reactions to trade results, increasing the risk of disordered thinking.

5. The Impact of Isolation

Feeling isolated in trading can also be a cause of overconfidence. Traders who avoid interaction with others tend to make decisions in solitude and are more likely to be swayed by emotional judgments. In such lonely environments, opportunities to recognize one’s own mistakes decrease, increasing the risk of developing overconfidence.

A trader’s personality and environment are major factors in causing overconfidence. By examining your own personality and improving your surroundings, you can reduce the risk of contracting this condition.

1. Increased Transaction Costs

The most obvious impact of “positive-positive disease” is the increase in costs due to increased trading frequency. Excessive trading leads to a buildup of spreads and commissions, ultimately squeezing profits. For example, if you make many trades in a day, the profit from a single successful trade can be wiped out by multiple fees. As a result, instead of earning a profit, you may end up with a larger cost burden.

2. Emotional Trading

Traders suffering from “posi-posi disease” tend to make decisions lacking composure. They are prone to acting on emotion, making baseless entries and attempting risky loss recovery trades. This repetition leads to a loss of business perspective, ultimately increasing the risk of expanding losses.

3. Ignoring Trading Rules

Traders suffering from this condition tend to disregard the trading rules they themselves have set. The rules established to maximize profits may be ignored due to anxiety. As a result, unnecessary risks are invited, and there is a possibility of serious damage to asset management in the long term.

4. Decline in Performance

If the symptoms of position fatigue continue, the reliability of trading methods is lost, and performance declines. As the win rate decreases and consecutive losses increase, funds will steadily decrease. In such situations, traders often experience increasing anxiety, leading to a vicious cycle where losses further expand.

5. Failure in Funds Management

Due to “positive-positive” disease, traders tend to underestimate the importance of funds management. Typically, funds management is the foundation of successful investing, but when afflicted with this illness, a sense of appropriate risk management becomes blurred. As a result, large losses can occur, leading to depletion of funds.

As such, the risks arising from continued “positive-positive” disease are varied. Traders must recognize this condition early and take appropriate measures. Self-reflection and taking necessary actions to retain profits are essential.

1. Reviewing Trading Time

By appropriately limiting the time spent trading, you can prevent unnecessary entries. In particular, it becomes easier to feel anxious by continuing to look at charts even when the conditions for entry are not met. By considering your schedule in advance and allocating time to other activities, you can reduce psychological stress.

2. Take Regular Breaks

If you feel mentally unstable during trading, it can be effective to take a bold break. Taking a break not only refreshes your mood but also provides a good opportunity to review your own trading style and strategy. Many successful traders assess their mental state and choose to refrain from trading when they feel the market is bad.

3. Utilizing a Trading Journal

A trading journal is a very convenient tool for promoting self-reflection. By recording your trades, you can clearly identify when and under what circumstances you are prone to exuberance. Specifically, in addition to the details of the trade, if you record your state of mind and background at the time of entry, and your thoughts on settlement, it will be useful for subsequent transactions.

4. Have a Long-Term Perspective

Short-term trades often increase the frequency of entries and can cause problems. Shifting to long-term trades allows you to prepare for each transaction and reduce the risk of being affected by FOMO. This can lead to more stable profits.

5. Effective Money Management

Withdrawing a certain amount of funds from your trading account can help control the desire to trade emotionally. If you have a lot of money left in your account, you may easily repeat trades. By reducing your funds, you can approach trading calmly and gain reassurance based on profits actually earned.

By comprehensively incorporating these measures, you will be able to overcome FOMO (fear of missing out) and achieve higher quality trades.

Clarifying Trading Rules

To suppress “positive disease,” it’s important to first establish clear rules regarding trading. By firmly defining entry and exit timings, as well as fund management criteria, you can trade without being swayed by emotions. Establishing your own method will allow you to reduce unexpected trades.

Step Away From the Chart Occasionally

Looking at the chart too much during trading can lead to impulsive trades due to mental tension and anxiety. Decide on a time to check the chart, and avoid unnecessary checks outside of that time. This will allow you to make calm judgments without being swayed by momentary fluctuations.

Utilizing a Trading Journal

By keeping a trading journal, you can objectively review your own trades. Writing down details such as the date and time of the trade, currency pair, and your feelings at the time will help you identify when you are most prone to FOMO (fear of missing out). Regularly reviewing this journal will deepen your self-awareness and help reduce trades influenced by emotion.

Leverage Outside Help

If you find it difficult to manage trades on your own, consider seeking support from professionals or trading consultants. Incorporating a third party’s perspective can eliminate your own biases and allow for more rational decision-making. Utilizing external support like this can improve the quality of your trades.

Setting Regular “Refresh” Times

Trading requires high concentration, so adequate rest is essential. Regularly refreshing yourself allows you to mentally recharge and maintain clear judgment. Setting aside time for walks or hobbies helps balance your mind and body and prevents excessive positivity.

Community Usage

Sometimes, consulting with other traders or the community can provide new perspectives. Exchanging information with peers can help deepen your understanding of the problems you’re facing and assist in finding solutions. Avoiding feelings of isolation and fostering a sense of joint growth can lead to prevention of FOMO.

By practicing these mindsets and specific methods, you will be able to reduce the risk of FOMO and achieve better trading.

Summary

Posi-posi disease is a problem specific to FX traders who experience mental stress and financial losses due to frequent trading and emotional transactions. To overcome this condition, it’s important to set appropriate trading times, take regular breaks, utilize a trade journal, maintain a long-term perspective, and practice effective money management. As preventative measures, you can minimize the risk of posi-posi disease by setting clear trading rules, maintaining a reasonable distance from charts, utilizing a trading journal, seeking external support, ensuring regular “refresh” time, and engaging with other traders. Traders should comprehensively implement these measures to improve their mental health and trading performance.

What is Posiposibyousho?

Posiposibyousho refers to the psychological state in FX or investment where one cannot feel at ease unless they constantly hold positions. In this state, baseless trades and frequent entries are repeated, potentially leading to losses. It also exhibits typical symptoms such as a compulsion to keep watching charts, which can affect daily life.

What are the characteristics of people who are likely to develop positive disease?

Strong self-confidence, clinging to short-term profits, being in an information-rich environment, leading a stressful life, and feeling isolated – these personality traits and environments increase the risk of developing positive disease. These factors can lead to frequent trades lacking sound judgment.

What risks are there if you continue with excessive optimism?

If excessive optimism continues, it can lead to increased transaction costs, emotional trading, and ignoring rules, ultimately resulting in declining performance and poor money management. In this way, if the condition progresses, there is a significant risk to asset security.

How can I prevent Posiposyo?

You can reduce the risk of Posiposyo by combining various measures such as clarifying trading rules, moderately limiting chart observation, utilizing a trading journal, leveraging external support, taking regular breaks, and using communities. It is important to practice these preventative measures.

Reference Sites

外為どっとコム マネ育チャンネル

FX初心者にありがちな失敗『ポジポジ病』とその対処法 - 外為どっとコム マネ育チャンネル

FX初心者はしばしば、「ポジポジ病」に陥りがちです。「ポジポジ病」とは、トレーダーが常に取引をしてしまう状態のことです。…

ＳＭＢＣ日興証券

FXで失敗する人に共通する５つの事例とその回避策【初心者必見】 | ＳＭＢＣ日興証券

FXで失敗する人に共通する５つの事例とその回避策【初心者必見】のページです。ＳＭＢＣ日興証券では、お客さまの多様なニーズ…