The Cautionary Tale of a Recovering Day Trading Addict

Episode Title: The Cautionary Tale of a Recovering Day Trading Addict
Release Date: January 28, 2025
Host: Waylon Wong
Producer: NPR’s The Indicator from Planet Money

Introduction

In this compelling episode of The Indicator from Planet Money, host Waylon Wong delves into the high-stakes world of day trading through the personal story of Chris Garver. The episode explores how day trading can spiral into addiction, the psychological factors that drive such behavior, and the broader implications for individuals and society.

Chris Garver’s Journey into Day Trading

From Savvy Investor to Addict

Chris Garver’s foray into the stock market began in 2010 with what he considered a prudent investment strategy. Initially, he invested in large, stable companies listed on the main British stock exchange. As he gained confidence and delved deeper into trading communities, Chris was enticed by the allure of higher returns through more volatile investments.

Chris Garver [00:24]: "But the deeper I got into it, you start going into forums and people start recommending stocks and you see some of the returns that were happening. And then that kind of opened up another world."

This new world introduced Chris to the excitement of trading smaller companies and using special trading contracts, which promised the potential for significant gains. His initial success was meteoric; Chris recalls:

Chris Garver [01:00]: "It was a world of buying smaller, more volatile companies or using special trading contracts in ways that magnify your gains or losses. Chris remembers investing in one company prospecting. For oil news hit of a new discovery and in two days I'd made over £80,000. And I thought, right, you know, I can make some serious money here."

Chris’s initial success fostered a false sense of security, treating trading as an intellectual hobby alongside his day job in digital media. However, this perception was misleading, as his trading activities began mirroring gambling behavior.

The Descent into Debt

Despite early profits, Chris soon faced substantial losses. To sustain his trading, he resorted to extreme measures:

Chris Garver [03:58]: "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."

By 2019, Chris was deep in debt, owing approximately $110,000. Determined to regain control, he vowed to adopt a disciplined trading approach and repay his debts. He succeeded in eliminating his debts by mid-2020 but struggled to break free from day trading.

Chris Garver [04:29]: "What I promised to myself wasn't relevant anymore because I was an amazing trader again. And I carried on."

The COVID-19 pandemic further exacerbated his situation. After losing his day job, Chris committed fully to day trading, hoping to recover. However, within two years, his debts soared to £145,000, straining his marriage and personal life.

Chris Garver [04:45]: "I went for it and then, unfortunately, within two years, all those profits had gone and I was £145,000 in debt."

Chris’s obsession with trading became a compulsive behavior, leading to secrecy and distrust within his marriage. The turning point came when his brother intervened, encouraging him to seek help.

Chris Garver [05:27]: "That was so hard because, because there were feelings of sense of guilt, of shame, of embarrassment, you know, I mean, I'm supposed to be, you know, the breadwinner winning male who provides for the family."

Acknowledging his addiction, Chris sought assistance and began the journey toward recovery.

The Psychology Behind Day Trading Addiction

Day Trading as Gambling

Waylon Wong introduces the concept of day trading, highlighting how modern trading apps like Robinhood and Webull have democratized access to the stock market, making it easier than ever to engage in day trading.

Waylon Wong [01:29]: "Buying and selling quickly on the stock market is known as day trading. And with the dawn of apps like Robinhood and Webull, winning or losing fortunes is easier than ever."

The episode raises a crucial question: Is day trading merely sophisticated gambling? To explore this, Wong brings in expert insights.

Expert Insights: Camelia Kunin and Darren Woods

Camelia Kunin, a finance professor at the University of North Carolina, explains the stark contrast between traditional investing and day trading:

Camelia Kunin [06:21]: "But day trading or buying crypto or foreign currencies, that can be gambling. That's how a lot of people use apps like Robinhood or Webull."

She emphasizes that conventional investing is typically stable and slow-paced, whereas day trading, with its rapid buy-and-sell actions, resembles gambling.

Darren Woods, a neuroeconomist, delves into the neurological aspects of trading addiction:

Darren Woods [07:18]: "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 that. In the experiment, we can vary just how much they look like lotteries or not. And what you find is that people do. A lot of people have this even in the brain, this. People love the chance of having a huge payoff, even though that chance is tiny."

Woods highlights how the human brain is wired to seek out high-reward scenarios, even when the probabilities are low. This propensity makes day trading particularly addictive.

Darren Woods [07:56]: "Some investors get hooked on the idea that this could happen again, Right? That they could get this huge return again. So these stocks that have a tiny chance, but for a very, very high payoff, those stocks can attract a lot of people."

The Mechanics of Options Trading

To illustrate how trading can escalate into high-risk gambling, Wong and Garver discuss options trading.

Chris Garver [08:24]: "Okay, so instead of paying, say, $200 for one Amazon share, you pay, say, $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."

Waylon Wong [08:38]: "Yeah, that would be amazing. It would mean I could now pay $200 for an Amazon share worth $250. So it's like I win $50."

Chris Garver [08:50]: "So you've basically made 10 times your money minus that $5 you paid for the option. But on the other hand, if the share price of Amazon goes down."

Waylon Wong [08:59]: "Surely that would never happen to me. I'm an investing genius."

Chris Garver [09:02]: "Yeah, you are."

Options trading amplifies both potential gains and losses, turning it into a high-stakes game akin to gambling.

Darren Woods [09:34]: "The average investor just doesn't have the knowledge. They don't understand all of these payoff structures. And the institutional investors on the other side of the trades will take advantage of that."

Woods points out that inexperienced traders are often at a disadvantage against professional investors who understand these complex financial instruments.

Recovery and Advocacy: Project Well Being

After acknowledging his addiction, Chris embarked on a path to recovery. With the help of his brother and financial support, he began to address his debts and seek professional help.

Chris Garver [09:57]: "I guess it was kind of a relief in some ways for that to happen. There is a route out of that and that you can come out and basically recover from it."

A year into his recovery, Chris founded Project Well Being, an organization dedicated to raising awareness about gambling addiction and providing support to those struggling with similar issues.

Chris Garver [10:09]: "For a lot of people, it's a real eye opener. People just don't realize how much of a situation, an issue that it is out there."

Through Project Well Being, Chris conducts gambling awareness workshops and collaborates with companies to develop supportive policies for employees facing addiction challenges.

Conclusion

Chris Garver’s story serves as a sobering reminder of the thin line between disciplined investing and addictive gambling. The episode underscores the psychological vulnerabilities that make day trading enticing yet perilous. Through expert insights and personal testimony, The Indicator from Planet Money sheds light on the urgent need for awareness and support systems to prevent and address trading addictions.

This episode was produced by Angel Carreras with engineering by Kwesi Lee, fact-checked by Sarah Juarez, and edited by Paddy Hirsch and Kate Concannon.