Gamification is a set of practices, usually aided by technology, that take advantage of human psychology to turn ordinary decision-making into a game, which then makes it more engaging to ordinary people.
What that means:
Gamification has been successfully used as an educational tool and has now crept into many industries to encourage consumer participation. Loyalty programs, for example, use game elements to get consumers to buy certain products and services. For investors, gamification has been a double-edged sword. Investment (the successful kind, anyway) is often either too complex or too slow-moving to compete for people’s attention. New mobile trading apps and commission-free brokerage accounts, many of which have game-like elements, such as badges, have made it far more enjoyable to buy and sell stocks. Whether investing should be treated like a game, though, is up for debate. While gamification can get people more interested in investing, it can also cause people to get carried away. That’s what we saw in early 2021 when small investors started using trading platforms to drive up the value of certain “meme stocks” professional investors had shorted. The price surge was short-lived, leaving many people in the red. If you do need to satisfy your gaming urge, consider playing with money you can lose or test out a practice account with virtual money.
Gamification can make it easier for investors to get excited about the markets, but it also tends to encourage short-term trading over long-term investing.