Is it safe to invest in trading apps?

Investing applications have gained in popularity in recent years, and for a clear reason that is with a few clicks on the phone, almost anybody can have access to the stock market. These user-friendly platforms are drawing millions of people, and as a result, the number of digital investment applications has increased greatly. Investing applications are also an affordable and accessible option for beginners to start making money. While this level of investment activity is great in many aspects, there are several factors to be careful about. Investing has risks, irrespective of the platform used.

Mobilesly is here to help anyone who is interested in investing and using trading applications.

What are trading apps?

The best stock trading apps allow you to purchase and sell stocks and ETFs with no fees. They also enable you to explore investments, manage your portfolio, and conveniently submit buy and sell orders. Trading apps are created with the security and safety of your trading activity in mind. To protect your transactions and financial data against fraud, encrypted firewalls are activated.

Some popular trading apps

These are some of the most popular investment apps in 2021.

1. Acorns
2. Robinhood
3. Webull
4. Twine
5. Fidelity
6. TD Ameritrade
7. Pepperstone
8. OctaFX
9. AVAtrade
10. XM

Major drawbacks of using a trading app

1. Taking hasty decisions and lack of one on one advice: Depending on your financial goals, human, face-to-face financial advisors will likely advise you to look more long-term with your assets. Their financial planning advice often involves things like debt consolidation, purchasing extra life insurance, establishing an emergency fund, and so on. Many financial applications, on the other hand, basically gamify investing, making it simple for investors to go in over their heads. They’re simple to use, but the smart and vibrant interfaces, push notifications, and alerts might entice investors to revisit frequently. Many long-term investors make a mistake by checking on their portfolios every day (or every hour). Too much observing makes many long-term investors more sensitive to short-term market  fluctuations, which might drive you to make hasty, reckless decisions, which isn’t always the best investment plan.
2. Not being able to understand the risks completely: Although the applications usually use a questionnaire to determine an investor’s goals, time horizon, and risk tolerance, there seems to be little follow-up to ensure that the individual truly understand the questions and the risk involved. Some apps, such as those with recognized names for margin trading or the ability to buy stocks with borrowed money, pose additional risk. Since you might lose more than you deposit in this type of trading, you should conduct more research beyond an app’s disclaimer and FAQ.
3. Paying a certain fee: Some investment apps require a monthly subscription, which may be beneficial in return for the services such as a smoother interface and features to help you save and invest. However, you should consider the additional expenses you may incur by using applications that effectively operate as middleman. Investing in its funds directly through a stockbroker rather than through an app may result in some additional money in your holdings for future growth. It is significant to compare the expense ratio paid by an investment app to the cost of purchasing an ETF or index fund directly through the brokerage. It may end up being around the same, but it’s always a good idea to double-check.
4. Access to Customer Service Is Limited: There are benefits in investing with a reliable brokerage. The first is the safety net of customer service access. In most cases, you can call and talk with one. This is not simply case for investing apps, which may only provide email support. When making investment decisions, being able to speak about your alternatives can add a degree of comfort. You will miss it in trading apps as your access to many customer services is relatively limited.
5. Your data is being sold: Several investing applications profit from a mechanism known as “payment for order flow” (PFOF). Brokerages and investing applications use the PFOF paradigm to route consumers’ trades through third-party providers. In exchange for the opportunity to fulfil the orders, the third party pays a fee to the brokerage or investing app. Essentially, these applications benefit by selling your order data to third parties. These third parties act intermediary your app and the stock market, so they have a big say over how much you pay for shares. It is imperative to highlight that dealing directly through the stock market in person does not jeopardise the security of your funds. It is ultimately up to you to determine whether you think this makes an app trustworthy.

Are trading apps worth it?

Investing applications that simplify financial opportunities can be both intriguing and informative. They have the potential to drive a diverse range of investors to the market. At the same time, considerable caution is important. They should be treated with caution, as with any resource that is connected to your funds.

Level of safety and using trading apps

The security of the trading software you use is dependent on where you get it and the institution that built it. If you get a trading app from a third-party app store, you stand the chance of getting something fraudulent. Third-party app stores do not have the same security as more well-known names like Google Play or the Apple Store. You can manage your investments, track them, and experience big profits if you select your stock trading app or online trading platform carefully.

Again it is highly recommended for anyone who is interested in investing in a trading app to take a second opinion from a professional to avoid facing any fraud or loss of funds in any way.

There are so many apps available on Playstore at the moment which allow you to make money online using your smartphone. Check out the top 6 Apps to earn money online in Pakistan available on Playstore for free through which you can make money online.