In the aftermath of the GameStop stock saga, many would-be investors have turned to mobile stock trading apps to capitalize on market investments. According to MarketWatch, a Dow Jones & Co. investment resource that tracks marketplace trends, February downloads of mobile trading apps such as Robinhood, E*Trade and Webull reached an all-time high, with expectations of continued growth.
While trading apps have made accessing and investing in the stock market easier than ever, participation always carries the potential for financial loss or gain. Before you invest with a stock trading app, be sure to follow these tips from your Better Business Bureau:
The best way to succeed at mobile stock trading is to do your homework before you begin. Familiarize yourself with concepts like expense ratios, trading commissions, asset allocations, individual stocks, exchange-traded funds and more.
Choose reputable app
The trading app you choose is more than just a platform for trading; it is the company that will serve as your broker. Be sure that any company you are considering has a good reputation and is legally licensed with the appropriate government authorities.
Set a budget
Make sure you are in a good financial position to start trading. 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% of your portfolio toward individual stocks, as this can expose your savings to too much volatility.
Practice by trading virtually. If you want to try the stock market but aren’t ready to risk real money, try “virtual trading” first. Many online stockbrokers offer platforms where you can learn the ropes by buying and selling virtual stocks.
Watch out for scams
Keep an eye out for investment scams. Stick to brokers that are registered with the SEC, and avoid anyone who uses high-pressure sales tactics or pyramid schemes. Sponsored ads and online forums promoting “fail-safe” stocks that are “guaranteed” to get you a huge profit for a small investment (if you act now!) are likely fake, or part of a racket designed to drive up the price of a stock temporarily. Don’t fall for this kind of “insider’s advice.”
For more information about investment scams and how to safely trade stocks via a mobile app, go to bbb.org.