COGNITIVE BIASES AND TRADING BEHAVIOUR IN APP – BASED PLATFORMS: A LITERATURE REVIEW

Abstract

The rapid rise of app-based trading platforms has transformed retail investing by making financial markets more accessible, faster, and more interactive for individual investors. At the same time, this digital shift has intensified the role of cognitive biases in trading behaviour, especially among younger investors who rely heavily on mobile applications for investment decisions. This literature review examines the relationship between cognitive biases and trading behaviour in app-based platforms, with particular attention to biases such as overconfidence, herding, loss aversion, anchoring, confirmation bias, and availability bias. The review synthesizes existing research on behavioral finance, digital investment platforms, and mobile trading psychology to explain how app design features such as push notifications, gamification, real-time price alerts, social cues, and simplified one-tap trading can reinforce impulsive and irrational decision-making. It also highlights how Millennials and Gen Z, as digitally native investors, are especially vulnerable to these influences due to their frequent use of mobile technology and greater exposure to online financial content. The literature further suggests that such biases contribute to excessive trading, poor diversification, short holding periods, and suboptimal portfolio outcomes. However, most studies remain fragmented, with limited integration of platform design, behavioral bias, and actual trading outcomes in a single framework. This review identifies the need for more empirical research that links digital interface features to observable investment behavior and evaluates the effectiveness of regulatory nudges and investor education in reducing bias-driven trading.