Until recently, the idea of managing stocks and shares from your mobile device—in effect, having a dealing room in your pocket—would have been fanciful. But today’s smartphones are making this a reality.
Private investors are increasingly using trading apps, not just to execute the occasional transaction, but to run entire portfolios.
Whether you’re new to buying shares or a seasoned stock market investor, here’s a look at the rise in trading apps and how to choose one to suit your needs.
Remember: investment is speculative, and as an investor your capital is at risk. This means you might lose some or all of your money.
Which Trading App Should I Pick?
Keeping the amount that you pay to trade and invest to a minimum will end up boosting the returns made by your underlying investments.
As with so many decisions to do with our finances, when it comes to choosing a trading app, there’s no clear-cut choice that will suit everyone. Much of the decision will depend on what you are looking for from a service.
Aside from charges, there are a number of other considerations you need to bear in mind to get the most out of your trading app experience. These include:
- How user-friendly do you find the app?
- What investments do you want to trade? Shares, funds, or more sophisticated investments?
- If you’re new to investing, does the app allow you to practice trading or trade virtually before taking the plunge?
- Aside from trading costs, what other admin charges does the app impose?
- Is there a minimum investment?
- Is your app regulated by ASIC?
- Are there any extra benefits/rewards?
Trading Apps for Various Scenarios
The trading app market is getting crowded. Here is a selection of apps that cover a range of scenarios, from novices to more sophisticated investors.
1) eToro – Good for Low Fees
eToro describes itself as a “bridge between the old world of investing and the new” and claims to be “the only place where investors can hold traditional assets, such as stocks and commodities, alongside ‘new’ assets such as the cryptocurrency Bitcoin”.
The app offers a decent mobile experience and, along with several of its rivals, provides the added appeal of zero-commission trades.
2) Selfwealth – Good for Beginners
Founded in 2012, Selfwealth remains a leading Australian trading app. At the time of writing, Selfwealth has more than 125,000 Australian investors using its platform, trading with more than $8.2 billion in assets.
Selfwealth allows its investors to trade Australian, Hong Kong and US shares, and has announced it will soon be expanding into cryptocurrency trading.
Regardless of trading size, Selfwealth charges a flat fee of $9.50—making it a cost-efficient trading app solution for those wanting to dip their toes into the stockmarket. It also offers training videos to teach Australians how to invest, again cementing its place as a trading app suitable for beginners.
3) Tiger Brokers – Good for International Trading
Tiger Brokers is a global share trading platform which opened its door to Australian investors in early 2022. The platform allows Australian users to trade on both the ASX and international stock markets, making it a versatile option for seasoned investors.
It also comes with comparatively low fees in the global market, and is also offering a $0 brokerage fee per order on US stocks and EFTs for new members for the first three months of trading.
With its clean, comprehensive user portal, competitive pricing and ample sign-up incentives for both local and overseas trading, Tiger Brokers could be a good choice of trading platform for investors wanting to expand their capability pool.
4) Superhero – Good for Bonus Features and Rewards
Superhero launched in 2020, and is an Australian startup that set out to make online trading simple and swift. It offers a $5 flat fee per trade on stocks and EFTs on the ASX, and $0 on US markets.
The startup has also been swift in its own growth, expanding in 2021 to also offer users the ability to invest their superannuation into ETFs and direct shares, rather than managing a SMSF.
Superhero has also partnered with Australia’s national carrier, Qantas, to offer its users bonus frequent flyer points when trading.
For those looking for more benefits and opportunities via a trading platform—rather than simply trading—Superhero is a prime contender.
5) IG – Good for More Experienced Investors
IG allows users to trade on more than 18,000 global markets, including shares, FX trading, indices, options, commodities and cryptocurrencies.
Its website and app feature interactive charts, news, automatic trading alerts and real-time signals for users. Investors can also spread bet or trade CFDs (contract for difference) on commodities, and options trading is available on various assets timed daily, weekly and monthly.
As CFDs are highly complex and procure a large risk of losing money rapidly due to leverage, IG is a platform that is best placed to be used by seasoned investors who can fully understand the risks involved.
6) Bank-owned Platforms – Good for Ease of Use
Many Australian banks now offering their own purpose-built trading platforms for their general banking customers. While it’s not a condition to be a previous customer of a bank in order to use their trading platform, it can be an enticing benefit for some as it allows your finances to all remain in one place or app.
Often, these banks will also offer customers signup bonuses, or waive certain fees for existing customers within their general banking database. CommSec, Commonwealth Bank’s trading platform, offers no fees on the first 10 trades, while HSBC’s Online Share Trading gives new users up to $500 cashback.
Despite the incentives, bank-owned trading platforms do often incur higher fees when compared to sole trading platforms. For example, in comparison to Selfwealth’s $9.50 flat trading rate, CommSec charges $19.95 for trades up to $5001, $29.95 up to $10,001, and 0.12% of those up to $50,001.
Getting Started
For those looking to invest via the stock market, the days of “calling one’s broker” are long gone.
Most investors who want to buy and sell shares, build a portfolio of investment funds or trade sophisticated instruments such as ‘contracts for difference’ now do so through an online dealing account.
Over the past two decades, investment platforms representing some of the biggest names in stockbroking and fund management have catered for this need, mainly with services aimed at a desktop or laptop-orientated customer base.
In the past couple of years, however, there has been a noticeable shift from desktop to mobile trading by private investors, with two factors having helped accelerate this phenomenon: the evolution of increasingly powerful smartphones, and the rise in the number of share trading apps.
Trading Costs
The investment space is cluttered with variable fees and charges from one provider to another, so it can be a complicated business for investors—whether app-based or desktop-based—to work out what they will actually pay.
When it comes to buying and selling shares, some providers impose a flat fee per trade. Others structure their charges to benefit users who trade the markets more frequently.
Users may also find themselves billed according to the size of their investment. Accounts provided by longer-standing platform providers often come with a monthly subscription or admin fee.
If you’re planning on buying overseas shares—for example, you fancy gaining exposure to US tech stocks priced in USD—then you’ll probably be charged an AUD to USD currency fee for doing so.
Meanwhile, if you’re an infrequent trader, your account might be hit with ‘inactivity’ charges.
Several app providers promote their ‘commission-free’ trading status. It’s a welcome and increasingly popular option across the investing space. But bear in mind that just because trades are free from commissions, it doesn’t necessarily follow that your account will be devoid of charges.
Brokers make their money in other ways, such as withdrawal fees and charges for currency conversion.
Before signing up to a particular investing app, work out what sort of investor you plan to be. Having an idea of how much you’re going to invest, how often you plan to trade, and which markets will be your primary focus can help determine the best and most cost-effective app for your needs.
Beware ‘Indiscriminate’ Trading
Two of the main attractions of investing via an app are the ability to trade quickly and, assuming you choose the right provider, at little or no cost.
On the face of it, this sounds like a winning combination with the potential for enhanced investment returns on your portfolio. However, research from a team at Frankfurt’s Leibniz Institute says that it’s still important to tread warily, even when you’ve got the investing power of a small dealing room sitting in the palm of your hand.
The academics suggest a move to app-based trading can do investors more financial harm than good if they’re not careful.
The researchers tracked the transaction of 15,000 customers of two large German retail banks over several years. They discovered that, when people placed trades via a mobile app, they were 8% more likely to buy “riskier lottery-type stocks” than when they bought via a computer.
Deals placed via apps were also 12% more likely to be for “past winner” stocks, in other words, those that had enjoyed a recent surge.
The researcher concluded that the findings “caution against the indiscriminate use of smartphones as the key technology to increase access to the financial markets”.