Annabel Palmer on the risk and rewards associated with mobile trades
TECHNOLOGIES that enable investors to trade CFDs from a sun lounger in Laguna Beach, or execute spread-bets from the Chamonix pistes, now have such a wide appeal that mobile trading accounts for a striking 34 per cent of CMC Markets’s turnover.
Having a fully functioning trading platform in your pocket has been transformative for both traders and brokers. But the rules to mobile trading are largely similar to online trading generally – including doing a trial run at several brokers before settling on one, carrying out research, and remembering the general risks associated with margined trading (notably the risk that you can lose more than your initial investment).
BE AWARE OF THE RISKS
“We want clients plugged into the markets because it enables them to make more trades,” says Craig Inglis of CMC Markets. And from an investor’s perspective, new tools can ensure a stable and convenient trading environment.
But this added convenience does carry certain risks. Brenda Kelly of IG warns that investors could be tempted to trade while not fully focused on the task at hand. “All trades should be planned with an entry and an exit ascertained before clicking the trade to open,” she says. Brett Evans of ETX Capital agrees. “Don’t trade when you’re down the pub with your mates. It can lead to impulse trades – made without the necessary research and planning,” he warns.
There is also a risk that traders could overtrade, and ignore the importance of risk management – which is ultimately the secret to successful and profitable trading.
In addition, mobile trading can tempt traders to deviate from their original strategies – and failure to counteract the temptation of emotional trades could cancel out the profits you could make from these platforms. Having all this information at your fingertips is a huge advantage – but constant updates can lead to forgetting the big picture. “And traders must trade for the right reasons – not just boredom trading,” says Inglis.
THE RIGHT TOOLKIT
The experts disagree over whether traders should use apps for all trading activities, or limit usage to exiting a position, monitoring a trade, or employing them when you don’t have access to a laptop or desktop. Regardless of how you chose to utilise your trading apps, there are ways to optimise your mobile experience. Before the launch of the iPhone, most mobile trading platforms had poor usability and a lack of trading tools to make the most out of trading on the move. But now, all the major brokers have a wide selection of tools that traders can access from the palm of their hands – so be sure to try them.
Most platforms now feature all the essential tools, from live news feeds and daily technical analysis, to comprehensive account management capabilities. Ricardo Evangelista of ActivTrades points to its MT4 and MT5 apps for iPhone, iPad and Android devices, which “allow for functionality that is close to that found in the traditional desktop environments”.
And like many brokers, City Index offers real-time news and live streaming charts via your mobile and tablet device. The company is also upgrading its iPad app to include new features, like dealing through charts.
CHECK YOUR CONNECTION
But there are technical risks to mobile trading. Evangelista warns that patchy cellular data coverage can impair a trader’s ability to react. “Unless you attach a stop-loss to each trade, you might find you’re unable to exit a trade when internet coverage is limited,” warns Kelly. As such, she advises that investors use the mobile app primarily as a monitoring tool – for basic quote checking – and possibly for exiting trades, rather than for wider trading activity.
And Evans recommends investors think twice before entering passwords into a device. “There’s an additional risk if traders lose their phone and, for instance, have automatic login,” he says.
DF MARKETS’S TOP TIPS
Use a stable platform – test it first.
Do your full research, and always try to make informed decisions.
Don’t be emotional when trading – and don’t take inebriated gambles that could cancel out the benefits of mobile platforms.
Make sure you look at the big picture – always remember your initial strategy.
Avoid trading under pressure, or making impulse trades based on minimal research.