Smartphones have taken the world by storm. Now, each of us carries a supercomputer in our pockets. The world of trading has also not been immune to disruption through smartphones. Smartphones now allow easy access to trading platforms and good data plans mean that you can trade while you’re on the move.

Trading through a smartphone or mobile trading has been increasing in popularity around the globe, and South Africa is no different. Mobile trading offers a convenient way for people to trade without incurring the high expenses of a desktop or laptop. Mobile trading also offers an alternative in case you find that you need to enter an urgent order but you do not have your computer with you.

People who trade primarily through smartphones are also called Robinhood traders, a term very popular in media these days with the rise of number of small retail traders investing mainly through trading apps. These Robinhood traders are a new breed of traders who take advantage of new technologies like trading apps and social media in their investing.

While some of them are experienced and have become successful retail traders, but many of the Robinhood traders are inexperienced making them lose money.

Trading platforms are now available on Android and iOS devices and this has allowed for the “gamification” of trading which makes it more attractive to small investors and traders. Young Robinhood traders look at itasa good side-hustle allowing some of the traders to make money apart from their regular jobs.

In this article, we’ll discuss how mobile trading works, what are the pitfalls of mobile trading, and should you trade exclusively through your mobile phone.

How does it Work?

Mobile trading has made trading the financial markets incredibly accessible and convenient, even though it has several downsides. Almost every online broker offers mobile trading services. This includes South African forex brokers regulated by the Financial Sector Conduct Authority (FSCA) such as AvaTrade, HotForex, Exness, and others which offer CFD trading instruments on Forex and Commodities. And if you want to sign up with an equity broker, then brokers such as Standard Bank Securities also offer a mobile trading platform. One can easily find licensed equity brokers and their trading apps online on Stock exchange website like JSE’s members page lists all stock brokers and their websites.

Smartphone trading already accounts for around 10% of all trading activities worldwide. This means that 10% of all trades (measured according to turnover) were placed through a mobile phone. Just a decade ago, it was unimaginable that people would be trading through the phones in their pockets.

The main reason for the popularity of mobile trading is that it allows you to trade even though you don’t have access to larger and more expensive equipment. Smartphones are quite accessible these days, and young people have them. This makes it possible for people without computers to participate in the financial markets and make money.

A lot of mobile trading is done by retail traders. These traders do not trade large amounts of money, and hence, need cost-effective ways to trade. Internet plans have also become highly affordable over the past decade, which makes it even easier for mobile traders. A good 4G connection and a 2 GB RAM smartphone with a 5-inch screen are all that you need in order to get started with trading.

Further, you will also need to open an account with an online broker, but this can be done through any web-enabled smartphone. As almost every online broker nowadays offers mobile trading services. All you need to do is to download a trading platform that supports Android or iOS, depending on the type of smartphone that you have.

Once you have downloaded the trading platform on your smartphone, you need to sign in to your trading account. That’s it. Once you have signed in, you can enter trading orders on your smartphone itself. You can also deposit money to your trading account through your phone and you can view charts to inform your trades. It’s also easy to view financial news so that you can be an informed trader.

What are the Pitfalls?

Experienced traders take a different view of mobile trading when compared to new traders. Experienced traders understand the nuances of intraday trading, a form of trading strategy that involves buying/selling securities on daily basis to book profits from market movements; and they swear that you need multiple screens and a proper trading space in order to perform well at intraday trading.

For example, you will need to access a lot of information in real-time in order to be successful at intraday trading. Some of this information includes how the global markets are doing, how well related securities are doing, what the latest news is, and you will need one screen dedicated to your trading terminal. Hence, it’s clear that you need several screens operating together to get all the information that you need in order to make informed trades.

Even though technological advancement has made it possible for you to trade through your smartphone, it may not be the smartest choice. This is because trading in the markets is not a casual activity. A lot of real money is at risk. In case you are not informed about the direction of the markets and you place ill-though trades, you will not be able to survive as a trader for very long.

However, all these objections are relevant only for intraday traders who need to stay on top of a lot of real-time data. If you’re investing or if you’re entering into positional trades, then these objections lose a lot of relevance.

Should You Trade with a Smartphone?

Even though it’s possible to trade through your smartphone, it may not be a very good idea. The best way is to combine your phone screen and your laptop screen and use them both. If you can afford to buy some extra monitors, then that’s even better.

The main reason for this is that intraday trading is a data-heavy activity, and you need quick access to several charts to inform your trades. Without this information at your fingertips, it may be difficult to enter into profitable trades.

Bottom line

Mobile trading is useful in case you need to enter an urgent order and you don’t have access to your computer, however, it may be risky to do all your trading through a single mobile phone screen. However, if you don’t have the luxury of investing in a computer and several screens, then starting out by using just your mobile may not be such a bad idea.