Looking centuries back in time, the only way for people to trade with each other was to travel for hundreds of miles across land and sea and bargain in person. Traders in the 21st century have it the easy way, though. They face numerous swift and hassle-free investment opportunities they can conveniently carry in their pockets.

Pro and Cons of Mobile Trading Apps

Mobile trading has been on the rise in the past couple of years, which makes sense given the great convenience it offers. All you have to do is reach into your pocket, take out your smartphone, log into your online trading account, and place your order.

Understandably, all major brokerages on the web cater to popular demand by launching natives apps for modern Android and iOS devices. Let’s examine some of the main pros and cons of trading on the go via mobile apps.

The Pros of Mobile Trading Apps

The Pros of Mobile Trading Apps at a Glance

  • Cost-Efficiency
  • Instant Access to the Markets
  • A Range of Educational Materials
  • Small Initial Investment
  • Social Trading
  • Free Demo Accounts

Mobile trading apps are just like traditional brokers but there is one major difference between the two – the former offer a significantly greater cost-efficiency. The commissions for order execution are nominal when in place, not to mention the best stock trading apps do not charge commissions at all. Instead, the fees associated with placing orders are built into the spreads, which start at zero pips at some mobile trading apps.

Another good thing about trading apps is that they make it easy for investors to access the stock and foreign exchange markets. When you use the services of a traditional broker, you must first find one and fill out tons of paperwork.

Then you have to establish a relationship and converse with the broker. This allows them to figure out what your investment goals are and determine what markets are suitable for you.

This is not the case with mobile brokerages where all you need to do is open an account, verify it, and transfer some money to its balance. The whole process takes minutes to complete.

The additional benefit is that placing orders via mobile trading apps is extremely fast and easy. With conventional brokerages, you have to give them a ring whenever you want to place an order.

Unlike most traditional brokers out there, their mobile counterparts normally give customers the chance to hone their trading skills and knowledge. There are top-notch educational materials you can use for this purpose, including daily market reviews, free courses, webinars, news, analysis, video tutorials, and podcasts.

Some of the best mobile apps support social trading, a practice that is unavailable at orthodox brokerages. Novices can discover successful investors and copy their trades. Often filters enable you to sift out the people whose trading style corresponds to your own investing needs.

The biggest benefit of trading via mobile apps is that you can start with just a few dollars. There are different account types to cater to the needs of large- and small-scale investors alike. You can buy parts of a given company’s stock, for instance.

Additionally, people who are new to trading can build up some experience by setting up free demo accounts. These allow you to trade with demo credits. They closely mimic the experience of making real-money investments.

The Cons of Mobile Trading Apps

The Cons of Mobile Trading Apps at a Glance

  • Traders Are on Their Own
  • Potential for Catastrophic Financial Losses
  • Leverage Can Lead to Massive Debts

The convenience of mobile apps is a double-edged sword. Placing orders is made quick and simple but often there is no one to advise traders that investing in a specific market can be risky. No one discourages inexperienced investors from trading with volatile instruments like options, for example.

Also, there is no one to immediately explain to you that the heart-breaking losses reflected in your account will eventually turn into a profit when your options settle in the future. You are basically on your own when trading currencies or stocks.

This can result in appalling tragedies. One fresh example occurred in June 2020 when a 20-year-old sophomore at Lincoln’s University of Nebraska took his own life because he thought he had racked up over $700,000 in losses after trading options with the popular online brokerage Robinhood.

Another disadvantage is that retail traders who use mobile apps often fail to adequately evaluate their level of risk exposure, simply because they are clueless about how trading with leveraged derivatives works. When used properly, leverage enables knowledgeable investors to expand their trading volume and generate higher gains.

In the hands of inexperienced traders, however, leverage can lead to devastating debts. The vast majority of retail traders who leverage their positions suffer severe financial blows and lose their entire balance. This becomes apparent by the very disclaimers regulated brokerages are required to post on their mobile apps.

While it is true the experience level of each new customer is evaluated with brief questionnaires, some rookies still manage to gain approval for using leverage. Without timely advice to stop them, such people stand a decent chance of parting with their money.

The bottom line is you must do your homework before you start trading anything via a mobile app. A person will never become a successful investor if they don’t put in enough time on research and building their knowledge.

There is no such thing as “get rich quick” in this life. Finally, it is important for you to inform yourself when choosing a mobile brokerage. Do some reading about different companies like this review of the XM mobile trading app before you sign up for a live account.

iLounge author Lucy Bennett

Lucy Bennett is a Contributing Editor at iLounge. She has been writing about Apple and technology for over six years. Prior to joining iLounge, Lucy worked as a writer for several online publications.