JUANA SUMMERS, HOST:
Many Americans are interested in the stock market and making money from it, but what if that interest became an addiction? The Indicator's Darian Woods and Wailin Wong have the cautionary tale of a man who got addicted to day trading.
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DARIAN WOODS: After his big win, Chris Gawor started to lose money on his investments. He would sometimes win back money, but over the next few years, he had eventually whittled away all of his savings. So Chris desperately tried to fund even more trading.
CHRIS GAWOR: At one point, I was spinning nine of my own personal credit cards and another four in my wife's name, which she didn't even know about.
WAILIN WONG: By 2019, the losses were adding up. Chris now owed the equivalent of around $110,000. So he made a vow. He would focus on disciplined bets, wipe away those losses, and get out of day trading. And by mid-2020, he did achieve the first part, paying back his debts, but getting out of day trading - not so much.
WOODS: In fact, after being laid off from his day job due to the COVID pandemic, Chris started day trading full-time.
GAWOR: I went for it, and then, unfortunately, within two years, all those profits had gone, and I was 145,000 pounds in debt.
WONG: Chris called his brother, who urged him to come clean to his wife.
WOODS: Chris' wife told him to get help. He had some form of a gambling addiction but in day trading.
GAWOR: I didn't think I was addicted. I didn't bet on horse racing, on sports betting. I didn't go into casinos. I didn't bet on poker. I didn't bet.
WONG: But day trading or buying crypto or foreign currencies - that can be gambling. Camelia Kuhnen is a finance professor at the University of North Carolina-Chapel Hill.
CAMELIA KUHNEN: There are studies where, you know, we put people in brain scanners, and they're given the opportunity to invest in assets, but we can vary - in the experiment, we can vary just how much they look like lotteries or not. What you find is that we are sort of hardwired to fixate on these huge payoffs.
WOODS: In fact, there's evidence that people are attracted to investing in companies that have had a giant gain, even if it's just once.
KUHNEN: Some investors get hooked on the idea that this could happen again - right? - that they could get this huge return again.
WONG: Further fueling this gamification of the stock market is what's called options. These are special contracts that give you the opportunity to buy or sell stocks at a certain price.
WOODS: So instead of paying, say, $200 for one Amazon share, you pay $5 for the option to buy the Amazon share for $200 in the future. And so if Amazon's share price goes to $250, that's very good for you. But on the other hand, if the share price of Amazon goes down, that $5 call option could be worthless.
WONG: Chris played with similar ways of trying to magnify his wins. What it ended up doing was magnifying his losses.
KUHNEN: The average investor, they don't understand all of these payoff structures. The institutional investors on the other side of the trades will take advantage of that.
WOODS: And after Chris sought help, he realized he had a day-trading addiction.
WONG: A year later, Chris founded an organization called Project Wellbeing. It runs gambling awareness workshops and helps companies develop policies and support for employees struggling with gambling.
WOODS: Chris is still married, but he still owes the banks a lot of money. And through his work, not the markets, he hopes to pay his debts back.
WONG: Wailin Wong.
WOODS: Darian Woods, NPR News.
SUMMERS: And in the U.S., the National Problem Gambling Helpline is 1-800-GAMBLER.
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