Tuesday, November 12, 2013

Be cautious of mobile trading apps

Mobile trading apps on your smartphone or tablet have never been more popular as today. This has of course to do with the fact that more and more people have smartphones and tablets these days. Mobile trading apps are easy and usually free. Almost every online broker has a mobile version of its platform as well, but is this necessarily a good thing? Being able to execute trades while you're at Starbucks or waiting for your next flight, or when you're at your friends party which is so boring, you have nothing better to do than selling the Euro with your Forex trading app on your smartphone. This is what I'd like to call 'impulse trading'; you come up with a trading idea, or you see something on the news that may affect a stock you're currently holding in your portfolio, and almost instantly you're drawing a conclusion by trading the mentioned stock. The problem is that mobile trading makes trading almost too easy. Of course, trading itself is very easy - you either buy or sell, but the danger lies in the fact that it's so readily available at your finger tips, that even the slightest thought can have the greatest impact on your portfolio. You hope that those decisions turn out for the best, since you may think that 'quick decisions'  make people money. No, no, you didn't miss the boat - you hopped on board right on time with your mobile trading app. Chances are that your strategy doesn't work. Mobile trading is dangerous because you're likely not able to fully focus and concentrate on your trade. When you're next in line in a super market and you were about to make your move on buying a particular stock, you're probably not thinking clear. This all has to do with your trading environment, I much rather prefer a trading experience like the one below:
Courtesy of stocktradingtogo.com (Blain's setup)
You can image this cost a pretty penny, I personally use two laptops (but I'm working hard towards a setup like the one above) - but what I'm ultimately trying to convey is that it's really all about your trading environment. It needs to be clean and clear of distractions so you can fully focus on your trading. The issue with mobile trading is that there are too many distractions (my own personal experience), all those distractions will lose you money in the long run. Brokers love mobile trading platforms, and that's the reason why they're most likely free for you to download. They know you'll lose money by making impulse trades, and that's what they're banking on. You shouldn't even have a trading app on your phone, too tempting. Stay away from the distractions, and stay in your 'comfort zone' when you trade.

-John

Disclaimer:

All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.