Traders always have looked for that next piece of technology to give them an edge over other traders. Whether we consider phones with a speed-dialer or computers that made algorithmic trading plausible, technology advances have gone hand-in-hand with trading advances.
Now, as smartphones and tablet computers are becoming the norm, traders are being given the opportunity to cut the cord and step away from the trading desk as more brokers now offer trading platforms on mobile devices. However, although the technology is widely accessible, it still is in its infancy and may not be capable of everything traders need. As such, it is important to understand what mobile trading platforms do well, where they fall short and what special considerations need to be made.
"At this point in time, [a mobile trading platform] may not be the one-stop, end-all solution for a trader, but it certainly is a very nice thing to have," says Paige Miller, director of customer relations at PFGBest. "Even though you have a desktop setup with a couple of monitors, the fact that you do have a life makes it nice to have that mobile trading platform because, if nothing else, you can monitor your positions from almost anywhere."
The ability to stay connected to the markets and to monitor your positions from anywhere at any time makes mobile trading from a smartphone or tablet very attractive. With a mobile trading platform, a trader even can step away from his desk to go on vacation and still be able to monitor his positions from the comfort of his beach chair.
"The biggest pro for having a mobile platform is access. I can sit here at the beach, check my email and still know what’s going on in the market. It’s being able to stay in touch, even when you’re not in front of your trading machine," says Joseph Cusick, senior market analyst at optionsXpress. "Being able to monitor your quotes and watch your portfolio when you’re on the go is invaluable."
That access can go a long way to assuage apprehensions that once may have been common. That doesn’t mean there are no drawbacks, though. Chief among those drawbacks is the issue of speed. "Speed is a consideration for anything you’re doing with mobile technology; you’re at the mercy of whatever kind of connection you have," says Nicole Sherrod, managing director of the Trader Group at TD Ameritrade.
Because it is not physically connected to a data line, a mobile device can send and receive data only as fast as wireless technology will permit, whether that is via a Wi-Fi connection or through a cell phone data service. Relying on a cell carrier has its own considerations.
"Certain carriers have poor coverage in some locations, so you have to be conscious of where you are and how your service equates to your location. If you’re someplace that is very congested, there could be so much traffic going through the towers that you’ll have issues," Miller says. "If you have trouble with dropped calls or doing the basics on your mobile phone, then using your phone for anything more than market monitoring probably isn’t a great idea."
Even when you do have a good wireless connection, it’s important to note that speeds still will be slower than a landline connection and that should factor into trading decisions. "For those who are actively trading, there isn’t a mobile device out there that really is going to allow you to walk away from a desktop or higher-powered laptop because your speeds always are going to be slower," Cusick says.
In addition to speed, traders need to make sure their mobile applications are capable of doing what they need them to do. This includes making sure the app supports any charts upon which you make trading decisions, the market orders you need and even going as basic as making sure it supports the products you want to trade. Not all products are available on every platform, with some offering trading in equities, but not options, etc. "Most of the mobile trading platforms are not quite as sophisticated as the trading platforms you typically would use on a desktop," Miller says. "They are getting better in regard to their charting capabilities and order placement, but I have not seen a mobile platform that really offers advanced order entry strategies, trailing stops or other features like that."
Consideration even needs to be given to where you get your trading applications. Miller says that there are numerous financial related apps on both the Android Market and the Apple App Store, and as such traders need to be sure they trust the source of anything they put on their phone or tablet. "Look at the source of the application. It’s always user-beware anytime you’re downloading an application. Do some research online on the broker behind the app to make sure it’s going to meet your needs," she says.
Finally, considerable weight needs to be given to any issues of security. It already was stressful to lose a phone just from the hassle of replacing the contacts, but now with financial information on it, the stakes are even higher. Fortunately, many brokers have security features built into their apps to prevent unauthorized activity and some phone carriers have capabilities to offer additional protection.
Most trading apps now require a trader to enter some sort of authentication whenever he or she opens that application. "Even if a trader were to lose his phone, the trading app still requires a password every time it is opened. So, not only would somebody have to find the lost phone, but they also would need knowledge of the trader’s user ID and password," Sherrod says.
Miller says brokers have this feature in place to protect traders, even if it can be annoying at times. "We’ve had customers become quite annoyed that they have to enter their passwords each time they access their account from a mobile platform, but we’ve told them that we can’t allow them to auto-login because there is too much risk involved in not requiring some sort of security feature," she says.
Hedging your platform
In addition to security features from brokers, some phone carriers offer an additional level of protection. "If a trader saves that password on his phone and that phone is lost, there are phone companies that can wipe out the entire memory remotely. Traders should check with their phone carriers to see if they have that functionality," Cusick says.
Just because you always may have a mobile device with you doesn’t mean it’s always going to work. Carrier coverage can be spotty in places or occasionally go out completely. Having a plan for when that happens is essential if you intend to trade from a mobile platform. "We always recommend [that] a new trader use a desktop platform, have access to the web-based platform and then offer mobile trading as an added option. Should anything ever happen, the trader then has three different trading options on top of access to [his broker’s] trading desk," Miller says.
Traders usually have been some of the quickest adopters of new technology, especially if it will give them an edge in the market. Before completely jumping in, though, Miller suggests you make sure you fully understand anything you add to your trading arsenal.
"Traders need to spend the time on the trading platform to understand all the ins and outs of whatever platform they’re using, mobile or not, so that they don’t have so many hurdles in front of them when they begin live trading," she says. "When you open an account and get ready to make a trade, you should know that software backwards and forwards so that you can’t make silly mistakes that might cost you money. Trading is hard enough as it is, don’t complicate things further by not understanding the software you’re using to do your trading."
Mobile trading opportunities definitely have the potential to expand the trader’s world. With a few considerations you should be able to leave your trading desk safely and not have to worry about your positions. Just one request: When you’re out for dinner with people, leave your phone in your pocket. Just because you can watch your positions from anywhere, doesn’t mean you should.