How to Trade Using Your Mobile Phone: A Guide for Beginners

Millennials were shy about investing in the market. However, many heed the siren call of the 9-year long bull market. A strong performing market and the ease of mobile apps open trading options to both new and seasoned investors.

Will Mobile Trading Create a New Generation of Investors?

Mobile trading technology makes it easier and cheaper than ever to research investments, trade and monitor your stock’s performance. According to a recent article in Business Insider, some prefer to dabble in the market by investing money they would normally spend on discretionary spending like a daily Pumpkin Spice Latte.

A smartphone is an essential tool for mobile investors. Since you trade using a phone app, security is a key consideration, the iPhone 7 features touch ID and other robust security functions that justify its cost. In addition to finding the right phone, you also need a generous data plan so you can check your investments anytime you want.

Apps

Popular mobile trading apps include:

  • Robinhood– A trendy mobile trading app that allows users to buy and sell stocks commission-free using their mobile phone. Robinhood traders tend to skew younger, and they tend to be the investors who buy a stock a week rather than five premium coffee drinks per week.
  • TD Ameritrade Mobile Trader– An app associated with a well-established company. This app enables mobile trading of equities, futures, options, and FOREX.
  • E*Trade Mobile– This app is similar to Ameritrade, but it offers a convenient voice search to make it easier to find specific stocks.
  • TradeHero– Are you interested in trading but not ready to risk your money? TradeHero is an educational app that allows you to create a fantasy portfolio and track the gains and losses. Young investors enjoy the gamified experience and the chance to practice selecting and trading stocks.
  • Stash– A micro-investing mobile app that allow you to invest as little as $5 in selected Exchange-Traded Funds (ETF). Some new investors are attracted ease of use, educational materials and seemingly low fees (just $1 per month). However, if someone invests just $5 at a time, a fee of $1 per month is pretty significant.
  • Acorn– Another micro-investing app that allows users to round-up the change for purchases and invest that amount. So if you buy a $4.75 latte, Acorn invests .25 for you. Like Stash, they charge a $1 monthly fee. Also, they partner with brands like Dollar Shave Club, Sofi, Apple and Expedia to invest small amounts when you purchase through a “found money” partner.

These are just a few popular mobile trading apps. The best App may depend on your trading strategy. For example, are you a day trader or a long-term investor? Mobile trading games like TradeHero allow you to experiment, but it may depend on your skills, goals and your risk tolerance.

  • Day Trading– These traders typically buy and sell stocks every day using programs that provide statistical and technical analysis. They don’t usually hold securities long term and take risks in hopes of short-term gains. For some, day trading is a full-time business.
  • Swing Trading– These traders look for short-term gains but typically over longer periods than one day. They may research a stock they believe will increase in value, hold it a few days or weeks, then trade it at a high.
  • Long-term Trading– These traders research a company, purchase a stock they see as promising and hold it longer term while they wait for the value to grow. Some may select growth stocks they hope to sell at or near a peak, while others choose stocks that pay dividends. The quarterly, annual or monthly dividends to serve as passive income they may spend or reinvest.

Diversifying Your Portfolio

Stocks are one of the best-known investment options, however, there are others to consider. Some mobile trading apps may offer the opportunity for a diversified portfolio that includes a mix of stocks and other alternative investments. Some of these alternatives include:

  • Options– These are related to stocks. An option is a contract that grants the “right” to buy or sell an asset like a stock when the price reaches a certain value or by a certain date.
  • Futures– Like options, futures are also a contract to buy or sell an asset in the future. Options offer the right to buy or sell, but with futures, this is an obligation.
  • FOREX– This refers to investing in international currencies.
  • Bonds– When you buy a bond, you are basically buying part of a debt. Federal and local governments, schools and for-profit businesses take out bonds. The returns tend to be lower than a growth stock, but the risks are also lower. Many investors prefer a mix of stocks and bonds.
  • Peer to Peer Lending– In some ways, Peer to Peer lending is like a bond, only bonds focus on debt from governments and well-established companies. Peer to peer platforms focus on loans to startups, small business and individuals with variable credit ratings.
  • Other alternative investments– Cryptocurrencies like Bitcoin, commodities, real estate, fine art and precious metals are among other investment options.

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