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      The psychology of cryptocurrency trading: Risk and protective factors

      review-article
      1 , * , , 2 , 3
      Journal of Behavioral Addictions
      Akadémiai Kiadó
      crypto-currency, trading, harm, risk factors, protective factors

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          Abstract

          Background and aims

          Crypto-currency trading is a rapidly growing form of behaviour characterised by investing in highly volatile digital assets based largely on blockchain technology. In this paper, we review the particular structural characteristics of this activity and its potential to give rise to excessive or harmful behaviour including over-spending and compulsive checking. We note that there are some similarities between online sports betting and day trading, but also several important differences. These include the continuous 24-hour availability of trading, the global nature of the market, and the strong role of social media, social influence and non-balance sheet related events as determinants of price movements.

          Methods

          We review the specific psychological mechanisms that we propose to be particular risk factors for excessive crypto trading, including: over-estimations of the role of knowledge or skill, the fear of missing out (FOMO), preoccupation, and anticipated regret. The paper examines potential protective and educational strategies that might be used to prevent harm to inexperienced investors when this new activity expands to attract a greater percentage of retail or community investors.

          Discussion and conclusions

          The paper suggests the need for more specific research into the psychological effects of regular trading, individual differences and the nature of decision-making that protects people from harm, while allowing them to benefit from developments in blockchain technology and crypto-currency.

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          Most cited references38

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          A ‘components’ model of addiction within a biopsychosocial framework

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            Maximizing versus satisficing: happiness is a matter of choice.

            Can people feel worse off as the options they face increase? The present studies suggest that some people--maximizers--can. Study 1 reported a Maximization Scale, which measures individual differences in desire to maximize. Seven samples revealed negative correlations between maximization and happiness, optimism, self-esteem, and life satisfaction, and positive correlations between maximization and depression, perfectionism, and regret. Study 2 found maximizers less satisfied than nonmaximizers (satisficers) with consumer decisions, and more likely to engage in social comparison. Study 3 found maximizers more adversely affected by upward social comparison. Study 4 found maximizers more sensitive to regret and less satisfied in an ultimatum bargaining game. The interaction between maximizing and choice is discussed in terms of regret, adaptation, and self-blame.
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              Motivational, emotional, and behavioral correlates of fear of missing out

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                Author and article information

                Contributors
                Journal
                J Behav Addict
                J Behav Addict
                JBA
                Journal of Behavioral Addictions
                Akadémiai Kiadó (Budapest )
                2062-5871
                2063-5303
                19 June 2021
                July 2021
                July 2021
                : 10
                : 2
                : 201-207
                Affiliations
                [1 ]School of Psychology, University of Adelaide , South Australia, Australia
                [2 ]College of Education, Psychology and Social Work, Flinders University , South Australia, Australia
                [3 ]Department of Psychology, University of Lethbridge , Alberta, Canada
                Author notes
                [* ]Corresponding author. E-mail: paul.delfabbro@ 123456adelaide.edu.au
                Article
                10.1556/2006.2021.00037
                8996802
                34152998
                0ae52b7c-cede-4420-8134-2a38b1a67864
                © 2021 The Author(s)

                Open Access. This is an open-access article distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License ( https://creativecommons.org/licenses/by-nc/4.0/), which permits unrestricted use, distribution, and reproduction in any medium for non-commercial purposes, provided the original author and source are credited, a link to the CC License is provided, and changes – if any – are indicated.

                Page count
                Equations: 0, References: 39, Pages: 07
                Product
                Categories
                Article

                crypto-currency,trading,harm,risk factors,protective factors

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