Trading is a losing game: an audit of deceptive choice architecture in demo-mode Contract for Difference (CFD) trading apps

Andrade, Maira; Costa, Daniel; Weiss-Cohen, Leonardo; Torrance, Jamie; Newall, Philip

Abstract

Mobile-based trading apps have made investing easier than ever before, but this includes enabling access to risky investments that many investors may not be able to trade safely. The UK financial regulator thereby requires Contract for Difference (CFD) trading apps to make disclosures such as, “89% of retail investor accounts lose money when trading CFDs with this provider”. However, these disclosures might be counteracted by either their suboptimal implementation, or by other aspects of these apps’ deceptive choice architecture. Therefore, the present study audited choice architecture characteristics of demo-modes of the 14 most-popular CFD trading apps in the UK. A content analysis found for example that 31.6 per cent of risk warnings did not comply with the regulator’s standards, and that only 35.7 per cent of apps contained risk warnings within the app’s main tabs. A thematic analysis suggested that apps’ educational resources could instil users with the hope of winning, by emphasising practice, strategies, and psychological mindset – instead of acknowledging luck as the predominant factor underlying CFD trading profitability. Overall, this study added to previous research highlighting the similarities between certain high-risk investments and gambling, and added to the behavioural public policy literature on deceptive choice architecture.

Citation

Andrade, M., Costa, D., Weiss-Cohen, L., Torrance, J., & Newall, P. (2025). Trading is a losing game: an audit of deceptive choice architecture in demo-mode Contract for Difference (CFD) trading apps. Behavioural Public Policy, https://doi.org/10.1017/bpp.2024.62

• Journal Article Type: Article
• Acceptance Date: Nov 13, 2024
• Online Publication Date: Mar 21, 2025
• Publication Date: Mar 21, 2025
• Deposit Date: Nov 13, 2024
• Publicly Available Date: Nov 13, 2024
• Journal: Behavioural Public Policy
• Print ISSN: 2398-063X
• Electronic ISSN: 2398-0648
• Publisher: Cambridge University Press
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1017/bpp.2024.62
• Keywords: Dark patterns, dark nudges, sludge, investing, personal finance.
• Public URL: https://nottingham-repository.worktribe.com/output/41873357
• Publisher URL: https://core-prod.cambridgecore.org/core/journals/behavioural-public-policy/article/trading-is-a-losing-game-an-audit-of-deceptive-choice-architecture-in-demomode-contract-for-difference-cfd-trading-apps/07BB4E4CC011413D8A41458F9ED32928