The news: The UK’s Financial Conduct Authority (FCA) has warned that the gamification of trading apps can lead to amateur investors taking on more risk, being misled by spurious information, and making investments which aren’t in their interests.
Gaming trading clampdown. The FCA surveyed 3,000 app users as part of a review into firms’ use of “game design” features. The research found:
App features may blur the lines between online investing and “gambling-like behaviors.”Gamification techniques that use positive reinforcement were implemented, including celebratory messages for making a trade and the use of points, badges, and rewards. The FCA said these can lead to people taking on more risk when investing.Push notifications were used, which can make people trade in a riskier way, with the biggest impact on younger and less-experienced investors.Stock leaderboards showing the largest price changes have been proven to lead consumers into behaviors that result in poorer returns.