Here's how investing apps encourage people to trade more often - Business Insider

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If your investing app is flashing red and green, that might be a sign that it's encouraging you to trade more

and keep money growing. "The chance that you're going to observe a loss goes down dramatically over time," Egan says.Egan says that many investing apps use the colors red and green — like stoplights — to motivate quick decision-making. He says that seeing those colors flash on an investing app is a sign that the app is trying to get investors to make more frequent trades.

"Both of these things are kind of making investing much like gambling or something that's a little bit more like entertainment," Egan says. "They're making it exciting over a very short period of time." In previous experiences, Egan says he's seen this in a variety of ways at more traditional brokers. "[Investing products] almost seemed free in a lot of cases. And that was because the fees were embedded inside of the product in a way where it was kind of hard to see them," he says. Oftentimes in cases like these, the broker kept the dividends paid by investments, a practice that can lower what investors actually earn and increase the brokerage's earnings.

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