Traders as Problem Gamblers: The Psychology of Traders in Hong Kong

Transcription

1 Traders as Problem Gamblers: The Psychology of Traders in Hong Kong Andy O. T. Lo Vincent C.S. Au Yeung Samantha H. S. So Dr. C. C. Chan Upper Iowa University Hong Kong Program

2 Introduction Gambling have been a widely researched topic in Hong Kong Gambling can involve any form of betting or wagering, from lottery tickets and sporting to trades on the stock market. Day traders can be considerd as professional gamblers (Chan, Leung, et al, 2011) Lack of research on speculative trading in Hong Kong

3 Literature review on trader Pat Fowler, executive director of Florida Council on Compulsive Gambling (FCCG) said, "There's more gambling going on in the stock market than all other forms of gambling combined. And for some people, it will end up having the same impact on their lives as compulsive gambling

4 Literature review on trader Edward Looney, director of the Council on Compulsive Gambling of New Jersey, estimates that roughly 10% of investors become problem gamblers and 5% more become compulsive gamblers (Kiplinger's Personal Finance, 2001)

5 Literature review on trader Some researchers find those overconfident investors are most prone to sensation seeking. (Grinblatt & Keloharju, 2006) Males are more prone to sensation seeking, and thus enjoy the thrill of trading (Barber and Odean, 2001)

6 Literature review on trader During the late 1990s, there were an increasing number of day traders who presented to the University of California, Los Angeles (U.C.L.A.) addiction clinic with the exact same signs and symptoms as someone addicted to traditional forms of gambling. The percentage of stock market traders who meet criteria for gambling addiction is not known, but the personality traits between day traders and gamblers are quite similar: risk taking, sensation seeking and action driven. (New York Times, 29 Oct, 2010)

7 The statement of problem The present study sought to understand the psychology and lifestyles of traders in Hong Kong. More specifically, this study intended to explore the differences between older traders and young traders

8 Hypotheses Hypothesis 1 : Traders can be considerd as at risk problem gamblers Hypothesis 2: Older traders and younger traders are different in their trading styles.

9 Method An qualitative approach was employed. 14 participants (N = 14), age range: Males; Mean 33 3 Females; Mean 40 All participants were interviewed on semi-structured questionnaires which covered their developmental history and gambling habits. The questions are given below:

10 Method Do you have a gambling (Trading) problem? Did you ever lose time from work or school due to trading? Has trading ever made your home life unhappy? Did trading affect your reputation? Have you ever felt remorse after trading? Did you ever trade to get money with which pay depts. Or otherwise solve financial difficulties? Did trading cause a decrease in your ambition or efficiency? After losing did you feel you must return as soon as possible and win back your losses? After a win, did you have a strong urge to return and win more? Did you often trade until your last dollar was gone? Did you ever borrow to finance your trading? Have you ever sold anything to finance trading? Were you reluctant to use trading money for normal expenditures? Did trading make you careless of welfare of your family? Did you ever trade longer than you had planned? Have you ever trade to escape worry or trouble? Have you ever committed, or considered committing, an illegal act to finance trading? Did trading cause you to have difficulty in sleeping? Do arguments, disappointments or frustrations create within you an urge to trade? Did you ever have an urge to celebrate any good fortune by a few hours of trade? Have you ever considered self-destruction as a result of your trading?

11 Method Data collection period was from May 2011 to Mid-July, 2012 (total: 14 months). Assessment tool was Problem Gambling Severity Index (PGSI) (Ferris & Wynne, 2001) Beck Depression Inventory (2002)

12 Problem Gambling Severity Index (PGSI) "In the past 12 months how often 1. Have you bet more than you could really afford to lose? 2. Have you needed to gamble with larger amounts of money to get the same feeling of excitement? 3. Have you gone back another time to try and win back the money you lost? 4. Have you borrowed money or sold anything to get money to gamble? 5. Have you felt that you might have a problem with gambling? 6. Have you felt that gambling has caused you any health problems, including stress or anxiety? 7. Have people criticized your betting or told you that you have a gambling problem, whether or not you thought it was true? 8. Have you felt that your gambling has caused financial problems for you or your household? 9. Have you felt guilty about the way you gamble or what happens when you gamble?" Scoring: 0= Never, 1= Sometimes, 2= Most of the time, 3= Almost always Cut off scores: 1-2= Low risk, 3-7= Moderate risk, 8-27= Problem Gambler

13 Detailed Thematic Analysis The study followed Hycner s explication process (Hycner, 1999) There are five steps in the process. 1. Bracketing and phenomenological reduction 2. Delineating units of meaning 3. Clustering of units of meaning 4. Summarizing each interview, validating it and changing it according to the situation 5. Extracting and developing general and unique themes and making a composite summary

14 Results Age (14 participants) 43% 14% 36% 7%

15 Results Mean = 4.14 (14 participants)

16 Results Age

17 Results

18 Results Older Traders (40-55)

19 Results They are proud to be day traders. Vivian: I enjoy day trading. Tiger: Through day trading, I recognize the economic prospects of different industries. Ban: I m a professional, even I lose money in stock market. I still have the ability to work and earn a living in an easy way. Ray: To differentiate pathological gambler and professional gambler, the latter is more logical and selfcontrol.

20 Results It cannot be a day job Tiger: People must have a job. I have career development. Day trade is a way to earn money for spending in pleasurable life, but not for earn a bread. Helena: I have professional knowledge in stock trading market. Ray : If you are in a bad mood swing, you cannot be a good trader in stock market. Herbert: Investment in stock market gives one a chance to earn a million.

21 Result It is an independent job. This job gives me more personal control. Fifi: I can make my own schedule according to my need. Home trade, I can spend more time with my children and family. Vivian: No job requirement, no age discrimination, I feel free for this job. Herbert: I enjoy day trading, it brings me income and freedom.

22 Results They have ability to control emotions and they can be a good decision maker. Ray To be a day trader, you must be high in self-control, I have unique analytical technique and concentration. Byron You must have a mathematical mind and good emotional control. Vivian I have excellent analysis and strategy after I receive some news from the market. I will trade when I predict the stock market would upward or downward.

23 Results They limit their loss and has a high command of control. Ray: When you lose, stop immediately and stay away from the TV until another transaction day.

24 Results It would not carry a bad influence on their daily living Ban : I will use extra money, for instance, my bonus to invest. When I get loss, it will not affect my daily life. Tiger : My investment money is part of my savings, it does not affect my routine income and expenditure even I have a great loss.

25 Results They treat their work as part of their lives. They love to win. Ray : Every day trader has their own theory or formula for investment. If they do not follow the formula, they will lose. Kathy : it is important to have basic financial knowledge, and some life experience for the risk management

26 Results Younger Traders (20-39)

27 Results Trading can be a job if they can master their skills Fong: A long-time job is to earn money. It would be better to work as a day trader at home. Jacky: It is difficult to save money as we have to pay many bills, rent and so on, so trading is one of the way out Brian: I realized that salaries of labor market is averagely lower than I trade at home. Why not trading? Ben: Trading is a part of my life as I am working in an investment company.

28 Results They are active traders and more aggressive Jacky: I check stock market every day and do research for that and I think that is the way to success Edwin: When I was studying in high school, I checked stock market on internet, If it s the time, I would call my mum to buy or sell for me Wan: I am interested in trading, I read many books about that and now I m the member of investment society in the university

29 Results Their family have Investment or gambling experiences Ben: My father and mother are also like gambling such as mahjour. Shing, Wan, Jacky, Brian, Fong and Edwin: My father and mother are also active in trading and sometimes they gamble in different forms such as mahjong.

30 Result They would borrow money from friends and family members at the beginning or when they lost excessively Shing: I was lost some million last year (2011), Luckily, my friends helped me to break this crisis. Wan: My mum did not ask me about trading problem, until she found that I lost $6000 in her account, finally she shouted me and helped me.

31 Results Comparisons between two age groups Older Traders Age: Years Old Participants: 8 Preferred a stable job before trading Using extra money to trade Active traders and more stable No investment or gambling family background They would stop or handled by themselves when they lost excessively Young Traders Age: Years Old Participants: 6 Trading can be a job if they can mastered their skills Using pocket money and part of salary to trade Active traders and more aggressive Investment or gambling family background based They would borrow money by friends and family members at the beginning or when they lost excessively

32 Results Comparison between two age group: -Young trader are more sensation seeking and overconfidence -Older trader have more self control and self regulation.

33 Result Similarity between two age group: - They feel trading is an easy way to earn money - Wining brings excitement; Losing means nothing - Most of them are introverted - Most of them state that they are not suffer from gambling problem - Family Members do not care much of their trading - Most of them do not have depression or much anxiety

34 Discussion Young traders: -Could be considered as at risk problem gambler Older traders: -Prudent investors

35 Discussion Impulsiveness: Moeller, Barratt, et al (2001) define impulsiveness as a predisposition toward rapid, unplanned reactions to internal or external stimuli with diminished regard to the negative consequences of these reactions to the impulsive individual or other - Most of young traders have the problem of impulsiveness Impulsivity partially mediates the relationship between depression and problem gambling (Haw, 2009) - Traders with impulsivity are scored low in depression inventory which match to the study

36 Discussion Young traders: Have pathways as the process to problem gambling includes a history of conditioning, habituation, and chasing losses (Blaszczynski & Nower, 2002) ECOLOGICAL FACTORS - Increased availability - Increased accessibility CLASSICAL AND OPERANT CONDITIONING - Arousal/excitement Subjective excitement Physiological arousal - Cognitive schemas Irrational beliefs Illusion of control HABITUATION - Pattern of habitual gambling established CHASING - Chasing wins, losses - Losing more than expected

37 Discussion Young Traders: Personal Fable -The personal fable is the adolescent's belief that he or she is highly special and unlike anyone else. Younger traders are inclined to develop such thinking. -Younger traders are more risk taking and more inclined to speculative trading.

38 Contact Andy Lo, On Tik / Hong Kong numbers: