Cryptocurrency Trading: When Investing Becomes an Addiction
In recent years, there has been an increase in trading (buying and selling financial assets) with cryptocurrencies, especially among young people. But why is this activity so attractive to this group? Why can it present similarities with gambling disorder and become an activity with a risk of addiction?
What is 'trading'?
Trading is the activity of buying and selling financial assets such as cryptocurrencies , stocks, currencies, commodities, or indices in financial markets with the aim of making a profit by taking advantage of their fluctuations. In trading , the focus is primarily on short- or medium-term price movements, rather than the long-term fundamental value of the asset, and includes the use of strategies, market analysis, and risk management.
'Trading' with cryptocurrencies and young people
Cryptocurrencies (Bitcoin, Ethereum or many others) are financial assets that can be bought and sold on digital markets ( exchanges ), just like stocks or currencies. Young people tend to be permanently connected, and online advertising presents this practice as an opportunity to get money quickly and easily and disseminates it through social networks, messaging channels, websites and specialized platforms.
The digital availability and immediacy of access to content 24 hours a day, seven days a week, along with anonymity and the fact that it has been promoted as an easy method of investment are factors that influence the increase in cryptocurrency trading among young people in recent years. In addition, there are a number of content creators, also called tipsters , who promote assets that benefit them, sponsored by certain platforms that promote trading and who, ultimately, convey the idea that if you do not invest you are missing out on an opportunity to earn money exponentially and with very little effort.
It is also important to keep in mind that the prefrontal cortex, which is still in the process of maturing, is involved in decision-making and risky behavior. Young people tend to act more impulsively and this may mean not waiting the recommended amount of time before making a decision to sell or buy assets.
We will not doubt that there are financial advisors specialized in this subject who can guide and reduce the risk of losses, although profits are never guaranteed.
Alex
The relationship between trading and gambling disorder
When trading becomes an addictive behavior, it follows the same pattern as gambling disorder: it involves a loss of control over the behavior of investing , despite repeated efforts to reduce or stop doing it, and has serious negative consequences in the personal, family, academic or work areas and, obviously, economically.
To understand why a person may lose control over trading or gambling, it is necessary to know how the human mind works in relation to decision-making when a behavior has become addictive.
There are a series of triggers that activate the emotion to invest in the case of trading , or to bet in the case of gambling. Following the fluctuations of the stock market , for a person who has decided to stop investing in it can be a trigger for behavior, in the same way that receiving an advertisement on gaming pages can be for a person with gambling addiction who has not played for a long time. There are also internal stimuli or triggers that can lead to a relapse, such as boredom or certain negative emotions.
People who lose control are guided by the emotion of excitement linked to "that time they won x amount of money" and continue betting because they believe that this situation will repeat itself.
Neuroscientist Antonio Damasio provides insight into how emotions influence decision-making. He argues that emotions related to pleasure or pain are the foundations of our minds , although we generally do not appreciate this reality “because mental images of the objects and events that surround us, along with the images of the words and phrases that describe them, consume a large part of our attention.” Emotions often determine the decisions we make and guide behavior toward reducing negative emotional states and seeking positive states . This implies that many decisions can be understood as attempts to avoid discomfort or to obtain gratification.
Thus, people who lose control in both trading and gambling act in a similar pattern. They have as their guide the emotion of excitement linked to "that time they won x money" and continue to bet money or buy and sell assets hastily in order to recover it, because they believe that this situation will be repeated . This gain works as intermittent reinforcement , that is, sporadically but irregularly and unpredictably. This type of reinforcement favors the expectation of the "prize" and causes the behavior of betting or trading to be maintained.
It is also important to mention the importance of certain thoughts that provoke and maintain the behavior of trading, despite the negative consequences. These are the so-called cognitive distortions , one of the most frequent of which is the idealization of profits and the minimization of losses.
Recovering from a behavioral addiction
What triggers addictive behavior?
The irresistible urge to perform a behavior that has become addictive (craving) leads to a strong physiological activation, often experienced as discomfort, and the person feels the need to perform it again. In the case of trading , when control has been lost, this behavior consists of investing or selling financial assets impulsively ; the person initially experiences an activation and later an associated feeling of guilt, due to the negative consequences that it will have.
We observe, therefore, how in decision-making, although it may seem like an apparently rational process, emotional factors and complex brain processes come together.
This type of pattern is the same as that followed by other behavioral addictions or substance addiction, as well as dysfunctional emotional dependence, in which the positive moments of the relationship are often idealized and conflicting situations are ignored or trivialized.
Trading follows a pattern similar to games of skill. In general, the person who invests in the stock market or cryptocurrencies does so based on the belief that they know the financial market and can therefore predict its fluctuations.
Similarities between trading and games of chance and skill
Games with bets in which the outcome is independent of what the player does are classified purely as games of chance . That is, they are games in which the response depends entirely on chance, not mediated by the player's behavior, as in slot machines (face-to-face or online) or instant lotteries (scratch-and-win tickets). On the other hand, there are games of chance that have an apparent component of games of skill , such as sports betting, poker and others, in which the player believes he knows the future results based on his prior knowledge of the subject. But in reality, regardless of this knowledge, there is always a part of chance and, therefore, it escapes all possible prediction.
Trading follows a pattern similar to games of skill. In general, the person who invests in the stock market, cryptocurrencies or other assets does so based on the belief that they know the financial market and can therefore predict its fluctuations or, as we have mentioned previously, based on the recommendations of tipsters or investment gurus.
Online gambling among teenagers and young people
How do I know if I am losing control over trading?
Some signs that we can see that there may be a lack of control over the purchase and sale of financial assets and that this may mean problematic use of this practice are:
- Maintain the behavior of investing money despite financial losses.
- Need to invest more and more to recover what has been lost.
- Maintain the behavior for longer and longer periods of time.
- Unable to reduce or stop driving.
- Hiding or lying to family or friends about the degree of involvement.
- Abandon other activities to dedicate more time to trading .
- Use trading to escape problems.
- Experiencing a feeling of guilt for the negative consequences that this behavior will have.
How can I regain control?
Some recommendations for regaining control if trading has become a problematic activity are:
- Reflect on the situation: what does trading bring me and in what ways does it harm me? It can help to do this in writing and mark an X on your calendar each day free from trading.
- Communicate the decision to a family member or friend and give them access to the account so that they can supervise it. Link the card to their mobile phone and have them confirm any financial movement.
- Install, with the help of this trusted person, parental control to avoid entering problematic pages and install the adblock application on all devices.
- Change daily habits: resume activities that you had stopped doing or incorporate new ones (sports, other hobbies, etc.).
- Focus attention again and again on what we are doing when we think about the problematic behavior.
- Seek specialized help if, despite following these steps, you are unable to quit.
