Stock, Options, and Cryptocurrency Trading Disorders

Gambling-like stock trading is attractive addiction Neuroscientists and other researchers believe that there are striking similarities between day trading, online stock options, crypto trading and gambling and crypto trading. fantasy Sports betting on the other.

Comparing Stock Trading and Sports Gambling (Recently Reviewed) here), we find that some speculative stock trading and fantasy league betting share some core behavioral similarities. In both cases, participants frequently stake their funds on uncertain and competitive outcomes and receive unpredictable and variable rewards. This same pattern causes gambling disorders.

For example, a key element underlying gambling addiction is the illusion of skill. In speculative stock betting and trading, users believe that randomness can be overcome through data analysis, expertise, or strategy. However, the results are also highly influenced by market volatility. Additionally, emotional triggers often include: dopamine Impatience caused by expectations, the thrill of victory, and the urge to “chase” losses after setbacks. (Chasing losses means that the person believes that he is losing and continues to gamble. must I should be able to win now. )

Both are socially enhanced, with traders through online communities and fantasy players through leagues, group chats, competition. It may be both identity-base (“I am a savvy investor”). Each activity escalates from low-risk participation through higher stakes, increased frequency, and emotional dependence, making the individual highly susceptible to behavioral addiction patterns even though the activity is skill-based rather than gambling.

recently, psychometric paper We introduced the Trading Disorder Scale (TDS) to assess disorderly stock trading among amateur investors. This scale was created to help determine if a person has a stock trading disorder and needs intervention and treatment.

day trading addict

In gambling and day trading, money is often exposed to highly uncertain risks, and individuals can lose their entire stake. When leveraged trading becomes frequent, short-term, and speculative, stock traders refer to it as betting on stocks rather than investing.

Two large-scale surveys of Dutch stock investors report that 4.4% of all investors meet the criteria for compulsive gambling in financial markets, and a further 3.6% meet the criteria for ‘problem gambling’. Investors exhibit core characteristics of addiction, such as being unable to stop or reduce, becoming addicted, losing control, and persisting despite harm. depressionand suicidal tendencies. Some traders interviewed in another study regularly used addiction and gambling metaphors when describing problematic trading, calling it a “rush” and saying they “couldn’t quit.”

Crash of 1929

Andrew Ross Sorkin’s new book, 1929: Inside the biggest crash in Wall Street historyis a bestseller that depicts human folly, greed, and greed. optimism This is spurring conflict. Sorkin said risky bets using debt (leverage) are the root cause of financial crises like 1929. In behavioral addiction terms, the temptation is a quick gain backed by illusions of control and the belief that “this bubble/time is different” are all hallmarks of gambling disorder. Sorkin showed in 1929 that the same ideas that drive gambling also drive speculative trading.

According to Sorkin’s documents, in 1929 many people do not have They invested in or acquired small parts of companies they believed in and admired. Instead, they assumed prices would continue to rise. envygreed, and using borrowed money (leverage) to get rich. However, this accident changed everything for several decades.

book animal spirit Nobel laureate Akerlof and Nobel laureate Robert Shiller provide underlying insights Psychological forces that encourage gambling-like behavior in the market. The authors revive the concept of “animal spirits” or irrational enthusiasm, but this is false. confidence, fearGreediness, and Enhancing News Articles Everything is different this time. They emphasized the role of stories in depicting people getting rich and fueling the speculative bubble from tulips. mania From the 17th century to the present, dot coms, Bitcoin, cryptocurrencies, and perhaps artificial intelligence (AI) Bubble. Prices are driven up by herd behavior, not actual value.

Online sports, gambling and stocks apps

For some traders, their behavior resembles a drug or gambling addiction. Lee et al. carried out systematic review Examining the link between gambling and financial transactions, we show through an analysis of 12 studies that financial transactions (stock trading, day trading, virtual currency trading) are associated with a higher risk of problem gambling.

Gambling focuses on short-term wins and immediate results. Similarly, frequent trading is a risky behavior because you gradually become unable to stop and become addicted to trading. Risk factors in trading can overlap with risk factors for gambling, such as youth and gambling. personality traits such as impulsivity, seek sensationand psychiatric conditions like ADHD, anxietydepression, and substance use disorders (SUD).

Features like instant access through mobile apps, zero commissions, and a gamified interface make stock trading more like a casino than an investment. Modern mobile trading platform design improves accessibility, speed, dopamine brain activation, and rewards.punishment feedback loop. Winning big can be euphoric and can make you feel like you’re on cocaine.

For young people and impulsive people with addiction or gambling problems, the best advice would be to limit speculative trading, avoid leverage, and monitor the time spent, money at risk, and emotional state.

Financial losses may occur traumatic And hard to forget. New neuroimaging evidence shows that losing money activates anterior insular brain regions, which are also activated by physical pain, suggesting that “financial losses are not metaphorical.” These losses engage systems that have evolved to remember severe pain, harm, and social threat, so they are not easily processed or forgotten.

Oracle of Omaha

Warren Buffett is considered the greatest investor of all time due to his long-term success. His reputation is built on buying quality companies at fair prices, holding them for the long term, and patiently waiting for opportunities to sell. Mr. Buffett’s behavior is almost the exact opposite of his “trading-gambling” attitude. The Great Depression of 1929 had a huge impact on Buffett, even though he was born after the Great Depression. Growing up with a stockbroker father instilled in him a keen interest in finance and the importance of frugality, shaping his prudent approach to investing. He warns that active traders are underperforming, with frequent trading costs hurting performance. Buffett emphasizes emotional controlavoid herd behavior and resist speculative mania.

summary

The similarities between day trading and options trading, crypto investing, sports betting, and gambling are discussed in a recent article, which argues that modern retail stock trading is similar to gambling in many ways. “Investing is different from gambling, but there is conceptual overlap between speculation and gambling.” Some experts say stock trading is different from gambling. own It’s an investment rather than a bet on a completely random outcome. But modern stocks, cryptocurrencies, intraday trading, and options trading pass the duck test. “If it looks like a duck and quacks like a duck, it’s probably a duck.”