The GameStop stock saga inspired many would-be investors to try their hand at trading stocks through an app. In fact, MarketWatch reported that mobile trading apps downloads climbed in February – a trend that is likely to continue.
Stock trading apps - such as Robinhood, E*Trade, TD Ameritrade, and Webull - have made playing the stock market easier than ever. However, no matter the platform, buying stocks always carries the potential for both financial gain and loss.
Before you invest with a stock trading app, educate yourself about the stock market. The only way to succeed at mobile stock trading is to do your homework before you begin. Get to know the basics of investing. Familiarize yourself with concepts like expense ratios, trading commissions, asset allocations, individual stocks, exchange-traded funds, and more.
Choose a reputable stock trading app. The trading app you choose is more than just a platform for trading; it is the company that will serve as your broker. Compare several trading apps closely, taking note of their fees, trading minimums, stock analysis tools, and educational offerings to choose the one that best fits your needs.
Set a budget. Make sure you are in a good financial position to start trading. Before allocating funds for trading, you should already have money set aside as an emergency fund - and money going towards your retirement on a regular basis. Since trading carries risks, you should never invest money you can’t afford to lose. Keep in mind that it is unwise to put more than 10 percent of your portfolio towards individual stocks, as this can expose your savings to too much volatility.
Understand trading rules. SEC regulations dictate how and when trades can take place. Get to know the rules so you don’t get penalized for breaking them.
Be wary of “hot tips.” Sponsored ads and online forums promoting “fail-safe” stocks that are “guaranteed” to get you a huge profit for a small investment are likely fake, or part of a racket designed to drive up the price of a stock temporarily.