Almost everyone saw a meme on GameStop or a TikTok tutorial on day trading. Everyone’s a finance wizard now – or so they think. Just download an app, follow a Reddit thread, and voilà: You’re a makeshift hedge fund manager from the comfort of your sofa.

Now, let’s get clinical for a hot second. This frenzy isn’t too far off from what you’d experience at a blackjack table in Vegas. Elation, despair, repeat. That’s not just trading; that’s a behavioral loop, replete with dopamine highs and cortisol lows.

In psychology, addiction doesn’t merely mean doing a lot of something; it involves compulsive behavior despite harmful consequences. The line between day trading and addiction can be thinner than the margin on a leveraged Tesla short. Trading can give people the illusion of skill and control, just like poker or blackjack can for gamblers. 

Is day trading addictive? Well, when you’re playing with charts and numbers like they’re colorful casino chips, and feeling actual physiological responses, you might want to consider if you’re investing or just rolling the dice. The line between finance and a Vegas trip can blur faster than a Robinhood transaction. So, while it might wear a suit and tie, day trading has a gambler’s soul.

Can day trading become addictive?

Is crypto trading a new form of behavioral addiction? At its core, we find a compelling amalgamation of risk-taking, accessible technology and constant social influence, reminiscent of both high-stakes gambling and excessive social media use. A recent study went beyond mere assumptions, seeking hard, empirical answers. It revealed an unsettling correlation between frequency of crypto trading and severity of problem gambling, with a moderately strong correlation coefficient of (r = 0.53, p < .001).

Here’s the thing: crypto trading has evolved, harboring features that make it quite addictive. We’re talking 24/7 availability, harsh volatility, an echo of FOMO exacerbated by media coverage, and substantial social influences. This high-intensity environment can trigger emotional responses and behavioural conditioning similar to gambling addiction. 

Why? Well, internal motivating factors, like thrill-seeking and the illusion of control, meet very potent external factors, like the social reinforcement from peers or constant price change notifications. This is a classic case of operant conditioning – a psychological theory postulating that behavior reinforced by rewarding stimuli (like earning money from a winning trade or social appreciation) is likely to be repeated. In simpler terms, the ‘high’ from a lucrative trade can be so potent that it becomes a self-perpetuating spiral. 

Nonetheless, it’s important to distinguish crypto trading from traditional forms of addiction. Some could argue that the strategic, informed decision-making in day trading separates it from the impulsiveness of gambling. After all, day trading requires careful analysis, forethought and an in-depth understanding of market dynamics, as opposed to the unpredictability and randomness of a casino roll.

Moreover, crypto trading is more of a ‘recreational’ activity for many; the thrill of a digital treasure hunt if you will. Does this occasional indulgence classify as an addiction? That’s an area requiring further exploration.

In one corner, we have proponents like Arthur & Delfabbro (2017) arguing: “it would appear that most individuals who engage in day trading are heavily involved traditional gamblers who include day trading in their repertoire of activities”. This was also underpinned by a UK residents’ survey, where almost a third admitted their crypto purchase was more of a bet than a business. Yet, the same survey reveals that one-third of the respondents view it as an investment opportunity. Instead of chasing quick, flashy gains, they focus on slow, steady growth over time, grounded in solid logic and empirical data. In our humble opinion that might suggest that a blend of fundamental analysis for macro-level strategy and technical analysis for pinpointing optimal entry points – using indicators and candlestick signals – most accurately reflects the approach of steady growth over time shown in the study.

The thing is, crypto’s volatile nature – their agility to play the coy mistress by teasing with dramatic gains one day but then slapping you with a 50% drawdown the next – hints at why it’s such a powerful temptation for both the gamblers and the investors. You got to admit it; the emotional highs, the lows, the dream of scoring ‘quick money’ in a world where game-show riches are as accessible as a smartphone app. It’s like gambling but on steroids, thanks to the tech wizardry and ease of trading platforms that hardly sleep. And let’s not ignore the social pressure, the whispering wind of online communities pushing you towards the next shiny coin. There’s a clear line between gambling and investing, yet in the spinning, dazzling world of cryptocurrencies, that line appears to be more akin to a blur.

The new reality of crypto trading brings with it, an array of possibilities and pitfalls. The lines between harmless pastime and harmful addiction may blur, making it all the more important to tread cautiously in the crypto universe. Regular gamblers are already jumping on board – the question is, are they aboard a runaway train or just ahead of the curve? Knowledge, after all, is the best form of armor against the risks we face. 

Signs of addiction

The research by J.Mills and L. Nower also shed light on demographic trends and overlapping risky behaviours:  “There were no significant differences for crypto trading frequency by marital status; however, there were differences by gender, race, and income, with males, Hispanics, and higher earners reporting greater trading frequency relative to their respective counterparts.”

The psychological harms are worth a mention too: weak to moderate associations between heavy crypto trading and symptoms of depression and anxiety were established, reinforcing previous findings on the adverse mental health impacts of problem gambling. In the end there might be a lot of similarities to other types of addictions, just with different specific behaviors but the same core symptoms: 

• Obsession. Continuous fixation on gambling activities or the next opportunity to gamble.
• Constant preoccupation. Always thinking about the next ‘big hit’ or win, making it a central focus of daily life.
• Restless evenings. Difficulty falling asleep or staying asleep due to constant thoughts about gambling.
• Anxiety-filled days. Ongoing anxiety or worry that impacts daily functioning, often related to gambling outcomes or opportunities.

How to get rid of your trading addiction

If you, or someone you know, nodded along to these signs – it’s time to roll up those sleeves and start cleaning the mess. Start by acknowledging the issue. Take a step back and let the reality sink in – introspection can be a potent tool here. Look into effective coping mechanisms: maybe setting trading limits, or diving into the nurturing pool of cognitive behavioural therapy. And do remember, you’re not in this rocky boat alone. Reach out for professional guidance. Enlist a finance guru, a mental health magician, or a supportive group of folks going through the same turmoil. Recovery is a journey, not a destination, especially when you’re driving down the twisty highway of trading addiction.

Ellen Diamond, a psychology graduate from the University of Hertfordshire, has a keen interest in the fields of mental health, wellness, and lifestyle.