The Compulsive Trader
by Van K Tharp, Ph.D.
Compulsiveness is perhaps the most serious of all trading problems. I have evaluated psychological
profiles on thousands of commodity and option traders. Despite the fact that about 50% of the traders I
have evaluated make money in the futures markets, I would still describe about 5%-10% of my sample as
being compulsive gamblers.
At least once a month I get a phone call from someone who has lost $250,000 or more in the markets and
who is wondering how I can help. They typically say, "My wife would kill me if I spent any more money
on investment-related stuff." It is obvious to me from the conversation that, despite their large losses and
their reluctance to obtain help of any kind, they are still active in the market.
As a result of these experiences, I became determined to gather more information about the compulsive
trader. I visited several local chapters of Gambler's Anonymous (G.A.) and found several members whose
primary area of compulsive gambling was speculative trading. One gentleman, an active commodity
broker, was very nervous and refused to be interviewed. Another person mysteriously came into some
money and dropped out of G.A. (probably to again play the markets). After several visits to various
chapters, I was able to find a member who had lost his wealth to the markets and who was eager to share
his story with me in order to help others. His story, told to me in April 1987, is the first of two articles
exploring the problem of compulsive trading.