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

Mobile-based trading apps have made investing easier than ever before, but thisincludes enabling access to risky investments that many investors may not be able to tradesafely. The UK financial regulator thereby requires Contract for Difference (CFD) tradingapps to make disclosures such as, “89% of retail investor accounts lose money when tradingCFDs with this provider”. However, these disclosures might be counteracted by either theirsuboptimal implementation, or by other aspects of these apps’ deceptive choice architecture.Therefore, the present study audited choice architecture characteristics of demo-modes of the14 most-popular CFD trading apps in the UK. A content analysis found for example that 31.6per cent of risk warnings did not comply with the regulator’s standards, and that only 35.7 percent of apps contained risk warnings within the app’s main tabs. A thematic analysissuggested that apps’ educational resources could instil users with the hope of winning, byemphasising practice, strategies, and psychological mindset – instead of acknowledging luckas the predominant factor underlying CFD trading profitability. Overall, this study added toprevious research highlighting the similarities between certain high-risk investments andgambling, and added to the behavioural public policy literature on deceptive choicearchitecture.