Why Trading Apps Feel Like Games and What That Costs You

You open your investing app to check one thing. Ten minutes later you have bought a stock you had never heard of that morning, because it was on a “top movers” list and a notification said it was up 14%. That is not a character flaw. It is design.

Trading apps borrow techniques from mobile games and social media to keep you engaged. Some of those features are genuinely helpful. Others nudge you toward trading more often, and frequent trading has costs. This guide explains the common nudges, what regulators and researchers have said and the settings that put you back in control.

What “gamification” means in investing apps

Gamification is the use of game-style features, such as rewards, progress markers and surprises, in a non-game setting. The SEC uses a broader term, digital engagement practices, for the behavioral prompts, game-like features and design choices that brokerages and advisers use on apps and websites.

In an August 2021 request for public comment, the SEC listed examples it wanted to understand better, including:

• Games, streaks and contests with prizes
• Points, badges and leaderboards
• Notifications
• Celebrations for trading
• Social networking tools
• Slot-machine style graphics, prize wheels and virtual scratch-off tickets

Not every feature on that list is harmful. A progress bar toward a savings goal can encourage good habits. The concern is features that reward activity itself, rather than outcomes you actually want.

The most common design nudges

Many of these are also normal features of any good app. Speed and simplicity are real benefits. The question is whether they make it easier to follow your plan or easier to abandon it.

What regulators have done

Massachusetts: In January 2024, the Massachusetts Securities Division announced that Robinhood agreed to pay a $7.5 million fine and make changes to what the state called its gamification practices, resolving complaints filed in 2020 and 2021. The consent order required Robinhood to permanently stop using features that mimic games of chance for Massachusetts customers. Robinhood said the matter concerned historical practices and rejected the premise that its app is gamified.

The SEC: After its 2021 request for comment, the SEC proposed a rule in August 2023 on conflicts of interest from firms’ use of predictive data analytics, which would have covered some engagement technology. On June 12, 2025, the SEC withdrew that proposal along with 13 others. As of this writing, there is no specific federal rule on gamification. Existing obligations, such as the duty for broker-dealers to act in a customer’s best interest when making recommendations, still apply. Rules may change; check the SEC’s website for current proposals. This is not legal advice.

What the research says it costs

The best-known academic study on this topic is “Attention-Induced Trading and Returns: Evidence from Robinhood Users,” by Brad Barber, Xing Huang, Terrance Odean and Christopher Schwarz, published in the Journal of Finance in December 2022. According to the paper’s abstract:

• Robinhood users engaged in more attention-induced trading than other retail investors, partly because of the app’s features and partly because it attracted less experienced investors.
• Intense buying by Robinhood users forecast negative returns. Average 20-day abnormal returns were -4.7% for the top stocks purchased each day.

In plain terms: piling into the stocks everyone is excited about that day tended to work out poorly over the following weeks.

Other costs of frequent trading are easier to see:

• Taxes. Gains on investments held 1 year or less are taxed as short-term capital gains at ordinary income rates, which are usually higher than long-term rates.
• Spreads. “Commission-free” trades still have a bid-ask spread, and you pay it every time.
• Options risk. Options can lose 100% of their value quickly, and some strategies can lose more than you put in.
• Time and stress. Constant checking turns a long-term plan into a daily mood swing.

Key takeaway: The real cost of a gamified app is not the confetti. It is the extra trades you make because the app made them feel easy and rewarding, often in stocks that are already getting the most attention.

Settings that reduce impulse trades

Most apps let you switch off the features that do the most nudging. Look for these in your app’s settings:

1. Turn off price-movement and “top mover” notifications. Keep only alerts for account security, deposits and executed orders.
2. Mute marketing and promo notifications in both the app and your phone’s notification settings.
3. Hide the real-time portfolio value if your app allows it, or remove the app from your home screen.
4. Remove options or margin access if you do not actively need it. You can usually downgrade your options approval level or turn off margin in account settings.
5. Turn off instant deposits so new money takes a day or 2 to arrive. That built-in delay is a cooling-off period.
6. Use limit orders instead of market orders, so you name your price and avoid chasing a spike.
7. Set up recurring investments into diversified funds. Automatic buying does the work without opening the app. Many apps support fractional shares, which makes recurring small purchases easy.

Build a plan the app cannot argue with

Settings help, but a written plan helps more.

• Split your money. Keep the core of your investments in diversified, long-term holdings. If you want to trade for fun, cap a small “play money” slice in a separate account, and do not top it up after losses.
• Write a 24-hour rule. For any new stock you did not plan to buy, wait a day.
• Check on a schedule. Monthly or quarterly is enough for long-term investing.
• Consider automation. A robo-advisor or target-date fund takes most decisions off your plate.
• Know what protects your account. Our guide on what happens if your brokerage app fails explains SIPC coverage, which protects custody, not your trading results.

If you are just getting started, our guide on how to open a brokerage account online explains how to choose an account type before you choose an app. The same principles apply to crypto apps, which use many of the same nudges; see our comparison of crypto ETFs and buying coins directly.

Where to start

Today, open your trading app’s notification settings and turn off everything except security and order confirmations. This week, set up one recurring investment that runs without you. This month, write down your plan: what you invest in, how often you check and how much, if any, is for active trading. Those 3 steps remove most of the pull that game-like design creates.

The bottom line

Trading apps make investing accessible, which is a real benefit. Some of their design choices also reward activity for its own sake. Regulators have pushed back in some cases, and research suggests attention-driven trading tends to cost investors. You cannot redesign the app, but you can change its settings and your habits so it serves your plan instead of your impulses.

Sources

• SEC: Request for information on digital engagement practices (August 2021) — definitions and examples of game-like features
• Massachusetts Securities Division: Consent order in the matter of Robinhood Financial, LLC — $7.5 million fine and required changes to game-like features
• Barber, Huang, Odean and Schwarz, “Attention-Induced Trading and Returns: Evidence from Robinhood Users,” Journal of Finance, 2022 — attention-induced trading and -4.7% average 20-day abnormal returns
• IRS: Topic no. 409, Capital gains and losses — short-term vs long-term capital gains treatment