Best Stock Trading Apps
The stock market has become so accessible, you can literally trade stocks on a mobile app for free. Here, we outline the best stock trading apps based on a number of crucial factors.
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“If you don’t find a way to make money while you sleep, you will work until you die.’’
This famous and perhaps a bit frightening quote (especially if you hate your job) is one of many said by Warren Buffett, the big daddy of investing himself. But we shouldn’t take quotes at face value—is his famous line even true?
Well, it pretty much is. One simply can’t save cash because, given enough time, inflation will turn it worthless—especially in today’s environment where inflation is the highest it has been since the 70s. Moreover, even passive investors with a lot of money in 401k accounts and mutual funds are in danger as most of the stock market can drop due to very high inflation and other macroeconomic factors.
All in all, if you save cash, you lose, and if you invest in a bunch of broad market index funds like an average investor, that’s also scary. The path ahead is perilous, so at the very least, we should all be armed with a tool that allows us to easily find, screen, buy, and sell assets that will protect our wealth while most investors and countries in the world are losing.
Luckily, the current scary financial environment couldn’t have come at a better time—in today’s world, everyone can have a powerful app on their phone that provides instant and easy access to all financial markets of the world. Let’s take a look at the premium stock trading apps of today and see what strengths give each of them an edge over the rest.
Top Apps for Buying and Selling Stocks
We examine apps based on usability, features, fees (or lack thereof), and trading technology:
TS Select: $2,000
TS GO: $0
$50 - $200 (jurisdiction dependent)
Active options and penny stock trading
All types of investors
Powerful tools for professionals
$0 for cash accounts
Minimum initial deposit
TS Select: $2,000
TS GO: $0
$50 - $200 (jurisdiction dependent)
Active options and penny stock trading
All types of investors
Commission-free stock trading
Powerful tools for professionals
Access to in-depth research and powerful tools
The Best Apps for Stock Trading 🏆
While trading from an app has become easy, choosing the right stock broker hasn’t. Whether your priority is free trades, micro-savings, investor education, or advanced tools, we’ve got you covered.
1. eToro – Best Overall
The best phones are the ones with all the latest gadgets, and similarly, the best stock trading app is the one that has all the modern high-end features tied in together seamlessly in a clean and easy-to-use interface. eToro not only has free stock and ETF trading, but it also has the broadest crypto offering out of any major broker. Users can also trade forex, and CFDs (although CFD trading is not available in the U.S. due to federal regulation).
- Free stock and ETF trading
- Intuitive platform with a seamless account opening process
- Social trading
- Large crypto offering
- Withdrawal and inactivity fees
- Only one base currency available
- Average customer support
The list of offerings is enough for advanced pro traders and there are many of them among eToro’s clients.
Not a pro trader? eToro still has you covered. The platform allows users to follow and copy the trades of a long list of expert traders through a feature aptly called Copy Trader. Essentially, you get a list of traders and their performance, you follow them just like on Twitter, and you can copy each trade they make with the simple push of a button—all for free, but with a minimum trade amount of $200.
|3,000+ stocks||Account minimum: $50|
|264 ETFs/ 19 indices||Commission-free stock trades: Yes|
|27 commodities||Inactivity fee: Yes|
|49 currency pairs/ 76 cryptocurrencies||Withdrawal fee: $5|
Another cool tool for long-term investors is the Smart Portfolios feature. Smart Portfolios are groups of stocks, ETFs, cryptos, or even pro traders bundled together according to a user’s preferred investing strategy to form a quasi-fund of sorts. For example, if a user wants to invest in the major crypto market, Smart Portfolios can assemble a list of all cryptos with a large market cap so the user can invest in them easily as they would in a crypto ETF. This free service also works with industry-specific stocks and other assets.
These services are free because they let you make more traders and eToro makes money from commissions. Although stock and ETF trading is free, the broker charges commission on all other products—but these are on the low end, even compared to the cheapest online brokers.
All of these features are great, but only really come into the spotlight on eToro’s well-designed platform. The app itself retains the full functionality of the desktop platform, has a safer two-factor login, a handy search function, and is available in 21 languages. Users can also set price alerts via phone notifications and there are 4 different order types to choose from on the app: limit, market, stop-loss, and trailing stop-loss.
All in all, eToro offers the full package: an intuitive platform that even beginners can use to gradually get better and an abundance of features and investment products that won’t leave any advanced trader wanting. Combined with low prices, and a low minimum deposit of only $50, eToro easily—and understandably—gets the first place on our list.
💰 How eToro makes money: eToro earns money by charging their clients spreads on trades, overnight and weekend fees for assets bought using leverage, withdrawal and conversion fees, as well as the inactivity fee applied to inactive accounts. eToro also makes money through payment for order flow (PFOF) by selling their U.S. client’s orders to market makers.
2. TradeStation – Best Software and Education
With a long history starting in 1982, TradeStation is a broker that sharpened its competitive edge by focusing on 3 qualities: great trading software, low prices, and excellent educational resources for investors of all levels.
- Free stock and ETF trading, as well as zero-commission futures and options
- Intuitive and feature-packed trading app
- Wholesome package of top-quality educational resources
- $1 minimum deposit for cash accounts and a $2,000 minimum for margin accounts
- Limited exposure to international markets
- Limited crypto trading
- No 24/7 customer service
- Deposit and withdrawal only available via wire transfer
This 3-hit combo makes TradeStation a great match for new traders who don’t need access to all the world’s markets but want a very intuitive trading process and tools to help them master it. Namely, TradeStation’s mobile app has a very neat and user-friendly UI that can be customized with all kinds of handy gadgets like interactive watchlists, news popups, and price alert notifications.
Every feature is easily accessible through the main dropdown menu that can be opened on any screen, making getting used to this platform about as easy and quick as it gets. This is great news for new traders but seasoned veterans can also make good use of the plethora of basic and advanced order types and research tools—the platform provides trading ideas from analysts and has in-depth fundamental data on all its products, as well as 170 technical indicators. This is a full package for serious researchers but you can augment it further with numerous free and paid addons that are available via the app.
However, all these fancy gadgets are not that valuable to beginners—but TradeStation has an education package that is. Namely, the platform has one of the most popular paper trading apps available and it gives users access to a long list of training articles and videos on all relevant topics. Moreover, users can tune into webinars and live events to get high-level advice and knowledge from expert traders.
|5 stock markets||Account minimum: $0|
|2,300 ETFs/ 11 futures markets||Trading fees: Low|
|5 cryptocurrencies||Inactivity fee: Yes|
|10 options markets||Withdrawal fee: $0|
When it comes to fees, all stock and ETF trades under 10,000 shares per trade are free. Options and futures trades are also commission-free, whereas each mutual fund trade costs $14.95. The inactivity fee only kicks in after one year of inactivity and there are zero withdrawal and deposit fees. All in all, a pretty great price structure except when it comes to mutual funds which are neither cheap nor expensive comparatively.
TradeStation’s only real drawbacks are that it is mostly just limited to U.S. markets and that it lacks 24/7 customer support. Moreover, bond trades can only be made via the phone, so this might not be the ideal broker for fixed-income assets.
In summary, TradeStation’s platform meets all the needs of both beginners and expert traders looking to invest in the U.S. markets, be it through stocks, ETFs, options, or futures contracts.
💰 How TradeStation makes money: Most of TradeStation’s revenue comes from trading fees, margin rates, and payment for order flow. Also, the brokerage offers a $99/month subscription for its research-focused desktop platform, TradeStation Analytics.
3. WeBull – Best for Free, User-Friendly Trading
Whenever there is talk about trading, conversations mostly focus on three things: stocks, ETFs, and options—and crypto is very much in that conversation too nowadays. These are the most popular investment vehicles among retail traders, as well as the only assets available on WeBull’s platform.
- Free stock, ETF, and options trading
- Solid selection of tradable cryptocurrencies with a reasonable spread
- One of the most intuitive mobile investing platforms for beginners
- No non-trading fees or account minimum
- Limited exposure to international markets
- Deposits and withdrawals only available via wire transfer which costs from $25 to $45
- Lack of features and investment products for advanced traders
- Slow phone support
This young broker only emerged in 2017 and focused on providing the cheapest and the most intuitive trading experience possible to the average retail investor. Here is how it works: There is no minimum deposit to open an account, the application process is seamless and quick, and the trading app is incredibly intuitive as it is well-designed and lacks advanced features that would make it confusing to new investors.
Trading stocks, ETFs, and options is free, whereas the broker charges a 100 basis point spread on crypto trades, which equals 1% of the whole transaction. However, the only markets available to U.S. users are the NYSE, NASDAQ, and AMEX, so diversifying your portfolio across multiple countries is not possible.
|3 U.S. stock markets||Minimum deposit: $0|
|2,300 ETFs||Trading fees: None|
|24 cryptocurrencies||Inactivity fee: No|
|Options contracts||Withdrawal fee: No|
The trading platform and the list of investments might be limited but this might actually be a positive quality for beginner traders—especially when we take WeBull’s education into account. Namely, WeBull’s platform comes with educational videos and articles with info on how to trade, analyze assets, and even how to use the app. However, these are not super detailed and mostly just cover the basics—there are also no proprietary webinars and such on WeBull’s platforms.
The one thing that makes WeBull less attractive to beginner traders is its slow phone customer support, but the message center on the app itself is handy for solving quick problems, while email is the best option for more complex inquiries. All in all, WeBull’s mobile app is an excellent fit for more casual traders who don’t need the advanced gadgets and investment products that experts work with, but just want to get into the U.S. stock market with minimum hassle and for the best possible price.
💰 How WeBull makes money: WeBull is able to offer free trading and makes a large part of its revenue through payment for order flow (PFOF) and other revenue streams. According to WeBull’s blog, the broker generates all its revenue from payment for order flow, margin interest, interest on free credit balances, and stock loans.
4. Interactive Brokers (IBKR) – Best for Global Market Access
Unlike the aforementioned couple of platforms, IBKR is a real professional investor’s trading app. None of this broker’s products strive for simplicity and user-friendliness at all costs—rather, this platform offers more features, more tools, way more tradable assets, and is generally more complicated all around. Here is what we mean:
- The most comprehensive list of tradable assets out of any competitor
- Feature-rich app with unique and powerful analytical and portfolio management tools
- Competitive pricing, especially with higher-tier memberships
- A wholesome package of free educational resources
- Users can trade with 23 base currencies and deposit and withdrawal fees can be completely avoided
- Complicated account opening process
- The trading app is fairly complex and takes practice to master
- Slow customer service
- Deposits and withdrawals only available via wire transfer
The mobile app has all the order types, price alerts, watchlists, and various research tools that an expert investor can with for, making it a very powerful piece of investing software. However, this wealth of features makes the app more complicated and the design could be more user-friendly. The account opening process takes a while and applicants are required to fill out various forms and questionnaires before their accounts are activated.
When that is done, IBKR offers access to just about all the world’s major stock and forex exchanges—about 150 of them— across all continents except Antarctica (thus far). Users can trade everything from the typical asset classes like stocks and funds to bonds, futures, options, and even CFDs and forex. There are only 4 cryptos available on IBKR so far but they are very cheap, with commissions ranging from 0.12% to 0.18%.
|83 stock markets||Account minimum: $0|
|13,000 ETFs||Trading fees: Very low|
|1,000,000+ bonds||Inactivity fee: No|
|101 currency pairs/ 32 futures markets||Withdrawal fee: $0|
As a well-known discount broker, IBKR charges very low, competitive commissions for stocks and ETFs while commissions for forex and mutual funds are average. Namely, stocks cost $0.0005 per share to trade with a minimum fee of $1 but traders who use IBKR Lite, the advanced membership, can trade for free.
There are several advanced membership plans on IBKR. We won’t get into too much detail on how each one works in this short overview, but essentially, having a higher trading balance makes users eligible for a better membership, which gives them lower trading prices and some of the cheapest margins on the market at 3.1%—IBKR is especially geared towards margin traders.
The broker also offers a great range of educational videos, articles, webinars, live events, etc., and an entire host of supplementary services—users get access to trading ideas, multiple news providers, IBKR’s tax optimizer, and a tool for finding and analyzing shortable instruments. The broker also offers an interest-earning program where investors can lend their stocks to the broker and earn regular interest on them over time, which is a very potentially valuable and rare offering in the investing world.
In summary, IBKR isn’t a plug-and-play trading app like WeBull and Robinhood, but its impressive list of tradable assets, advanced research tools, and different membership levels make it a true international brokerage platform. Interactive Brokers is best suited for advanced traders or those who want to become experts and are not daunted by this platform’s complexity and wealth of features.
💰 How IBKR makes money: The majority of IBKR’s revenue comes from charging commissions on trades and earning interest on clients’ idle assets. The broker also makes money with margin rates as well as payment for order flow—PFOF is only applied to advanced accounts with zero-commission trading.
5. Robinhood – Best for User-Friendly Margin Trading
According to the internet, investing suddenly became cool and mainstream back in 2017, and this is because of Robinhood—the first “commission-free” broker. Soon thereafter, other brokers followed suit and eliminated their commissions but Robinhood still managed to climb to the top of the competitive ladder because of its brilliantly designed trading app.
- One of the most user-friendly trading apps
- Free stock and ETF trading
- Competitive margin rates for RH Gold users
- No non-trading fees or account minimums
- Limited list of tradable assets
- Very few educational resources
- Limited research tools
- Customer service is only available via email
Namely, the RH trading app makes investing so easy and intuitive that it has little competition when it comes to catering to casual and beginner traders. The account opening process is quick, there are no fees to worry about whatsoever, and the app provides access to the full breadth of the U.S. stock markets.
|5,000 stocks and ETFs||Account minimum: $0|
|7 cryptocurrencies||Trading fees: None|
|650 foreign stocks via ADRs||Inactivity fee: No|
|Stock options and stock index options||Withdrawal fee: $0|
The margin rates with a regular account are 9.75%, which is quite high, however, this can be lowered to 5.75% by upgrading to a RH Gold account. The Gold membership also gives users a 3% return on all idle cash, as well as bigger instant deposits and more market data sources. This upgrade costs $5 per month, requires a minimum trading balance of $2,000, and RH even offers a free 30-day trial—for margin traders, this is a small price to pay to get such competitive margin rates.
All of the aforementioned qualities are what made Robinhood successful, but now we have to look at the other side of the coin. The app is limited when it comes to research tools and tradable assets—this makes RH less suited for advanced traders who need more than just basic tools for their analysis. Moreover, there are no educational resources to speak of aside from a few articles, and users in trouble can only contact customer support via email.
On top of that, Robinhood is notorious for its meme stock episode in 2021 when it blocked the trading of about 50 stocks, locking traders out of the ability to trade their assets, so it is not a broker without flaws or bad episodes. All in all, the RH app is very similar to WeBull’s in its being geared towards casual retail traders but offers better margin rates for leveraged trading.
💰 How Robinhood makes money: According to the latest reports, Robinhood generated around 70% of its total revenue from order for payment flow (PFOF). The rest of its revenue came from Gold memberships, margin interest, stock loans, and interest generated from clients’ cash holdings, according to the broker.
Investor Warning: Carefully consider the investment objectives, risks, charges and expenses of any investment company before investing. All securities trading, whether in stocks, exchange-traded funds (“ETFs”), options, or other investment vehicles, is speculative in nature and involves substantial risk of loss. Robinhood Financial encourages its customers to invest carefully and to use the information available at the websites of the SEC at http://www.sec.gov and FINRA at http://FINRA.org.
6. Acorns – Best for Passive Investing
Setting up a portfolio to make money while you sleep sounds like a great idea but many people simply do not have the time to devote to active investing, nor the necessary skillset. Investing in a volatile market without a roadmap is very, very dangerous, and so, some investors are better off seeking professional help managing their money—and Acorns is the perfect app to do this seamlessly and for only $3 to $5 per month.
- Very user-friendly app with a seamless account opening process
- A truly hassle-free investing experience with several money-saving features for everyday purchases
- Only costs $3 per month for a personal account and $5 for a family account
- Multiple account types
- Users cannot buy and sell individual stocks
- No 529 account for college funds
Here is how it works: After a quick sign-up process, users need to deposit at least $5, and then choose their level of risk tolerance. The intuitive app will then use the deposited money to create a portfolio consisting of stocks, bonds, and funds—these portfolios were created and are managed by Acorns’ in-house professional financial managers and their goal is to provide steady returns over the long term.
|Account Type:||Primary Benefit:|
|Acorns Invest||Basic taxable account|
|Acorns Later||Tax-advantaged retirement account|
|Acorns Spend||Online marketplace with cash-back deals on goods of over 200 brands|
|Acorns Found Money||Withdrawal fee: $0|
|Acorns Early||Custodial account for children|
And so, users who want to receive a typical stock market return year over year can simply put money into their account over time and reap the benefits of compounding interest in the future. However, everything described so far, although hassle-free, is very basic, and Acorns offers so much more.
Namely, the app can invest money automatically through automatic deposits you can set up, and using the Round-Ups feature. Whenever an investor uses their Acorns debit card to purchase something, the value of that purchase is rounded up to the next dollar, and the difference is automatically invested into their portfolio.
Moreover, using Acorns for purchases also gets clients sizable discounts across 200 brands—of course, the discounted amount is automatically invested into the portfolio. The idea is that users should passively and almost unknowingly save and earn money by spending money on day-to-day stuff. The debit card can even reimburse some ATM fees.
This makes Acorns a popular tool for truly passive investing but it offers close to nothing to active traders. Users cannot choose which stock to invest in as Acorns has complete control over their portfolios. All in all, Acorns is a very handy app for investors who want no hassle whatsoever, but it can only be a supplementary tool to someone who wants to have direct control over their investments.
💡 How Acorns makes money: Like most robo advisors in the market today, Acorns makes the bulk of its revenue through subscription fees. However, Acorns also generates revenue from the interchange fees incurred when using the Acorns Spend debit card.
7. TD Ameritrade – Best for Advanced Traders
In the world of trading apps, few have as many accolades and a good reputation as TD Ameritrade’s thinkorswim. The platform has no real weak points—the design is very enticing and intuitive, which is great for beginners, but the app is also packed with features that will meet any pro trader’s standards.
- Excellent trading app design for investors of all skill levels
- A wide range of trading assets in the U.S. markets
- Great education and research resources on the platforms
- Quick and reliable 24/7 customer support
- Pricey commissions on mutual fund trades and futures contracts
- Very high margin rates compared to the industry average
- Costly withdrawal fees for wire transfers
All the charting tools, advanced order types, and detailed fundamental data are tied together in one user-friendly package. Moreover, the app has a news feed, as well as a feed of trading ideas—and if that’s not enough, the platform gives access to webinars and a very comprehensive series of video and written investing courses called the Immersive Curriculum.
In summary, the trading software and its features are at the very top of the game—but on the other hand, TD Ameritrade’s pricing is a bit all over the place. Namely, stock and ETF trades are free and there is no pesky inactivity fee to worry about, but trading futures cost $2.25 per contract and mutual funds cost a whopping $49.99 per transaction. Although to be fair, there are also about 3,700 free funds to buy on the platform, so this might be OK.
|3,700+ stocks||Account minimum: $0|
|13,000 mutual funds||Trading fees: Low|
|100 free ETFs||Inactivity fee: No|
|80+ cryptocurrencies||Withdrawal fee: $0|
To make things better, there are no deposit fees, and users can only transfer money to their accounts via check, ACH, or wire transfer. Withdrawals, on the other hand, are quite pricey—withdrawal via wire transfer costs $25 per transaction, but they are usually completed in a day or two. Another rather pricey aspect of TD Ameritrade is its margin account which offers a very high margin rate of 11% (compare that to IBKR’s 3.1%).
TD Ameritrade focuses on the U.S. market and has high costs in some areas but offers a great trading experience for investors of all skill levels with its powerful, yet very user-friendly trading app. However, traders who want to diversify into foreign markets, trade cheap futures, or trade on margin have better options.
💰 How TD Ameritrade makes money: Besides charging spreads on forex trades and earning through payment from order flow, TD Ameritrade offers paid products that include extra features on the trading platform, robo advisory services, and broker-assisted trades. The brokerage also earns money through interest on uninvested cash and margin rates.
How To Use Stock Trading Apps (Without Losing Your Shirt) 📈
Ideally, when you’re looking at a stock trading app, you should gain access to all investment assets available. Afterall, a mobile stock app can serve as a great boost to your personal finance.
However, when it comes to trading stocks with a smartphone, there are specific features you should look for, including:
- Access on all iOS and Android devices
- Easy-to-use functionality
- Management of all investments on your mobile phone
- Access to buying and selling orders on your phone
- Investment and banking account management via your phone
- Fast and accurate trade execution
- Mobile accessible research and education tools
- Access to fractional shares
How Much Money Do You Need to Get Started? 💵
Most mobile apps like Acorns, Stash, and Robinhood require very little to get started. In fact, the majority of leading stock brokers don’t charge any commissions at all. You typically have no account minimum to start investing from your smartphone.
However, the amount of money generally depends on what investment assets you want to buy. If you plan on trading in mutual funds, for example, you’ll need to have a minimum of $1,000 or more. However, ETFs can be purchased for much less.
You can even get started with very little money — regardless of the price of one share. Fractional shares allow investors to buy a portion of a share, which means less money required to get started.
You also want to consider the commission costs based on the stock brokerage you choose. If there are trading fees involved, these can accumulate over time if you’re a fairly active trader.
Luckily, today’s best mobile apps no longer charge commissions for stock trades and ETFs, hence commission-free stock trading. Some stock brokers still charge fees however, starting at $5 per trade with an increase in trading fees from there.
You usually won’t have to pay any monthly fees. Again, most of the top mobile apps offer commission-free trades. If any trading fees are involved, they’re usually based on your trading volume, rather than flat monthly fees.
Can I Deposit Money with a Debit Card on my Stock Trading App? 💳
Yes, you can use a debit card to fund virtually all popular stock trading apps. Some will require an ACH deposit directly from a bank account, but most will allow the use of debit cards. Credit cards, however, are normally not an option.
Choose a Trading App Based on Your Investment Personality 📲
How do you like to invest? If you want to bank and invest all in one, then you can look at apps like Charles Schwab to offer more advantages. However, active traders may be more interested in TradeStation or Interactive Brokers.
E*Trade and TD Ameritrade offer the most educational tools and have access to the most investment asset options. Both of these companies also have robust mobile trading apps and research tools. If you plan to make solid investments and like to follow trends, these mobile apps have a lot of extras for the value.
Others will offer long term investment portfolios as well. Many full service stock brokers will offer various investment accounts — the totality of which can be managed directly through the mobile app.
🇬🇧 Are you located in the United Kingdom? Stock trading varies by jurisdiction. See our report on the best stock trading apps in the UK to get started.
Use an App with Virtual Money First 💡
If you aren’t sure how stock trading or the stock market works, you may want to check out TradeHero to get started. These apps help you learn with a fake portfolio so you aren’t spending money to test out strategies.
While stock trading itself is low cost in today’s technology-driven world, your funds are still at risk. It’s best to use simulators that incorporate real-time data to show you whether your investments will earn a profit and give you confidence in your investing without spending any money.
Don’t Buy Too Many Shares Your First Time — No Matter What They “Recommend” 🙅♂️
It’s best to start slowly and build your risk. If you get too gung-ho when buying stocks, you will likely experience unnecessary losses. Instead, you can trade with a small position and work your way up to buying more shares as your position gets better.
Warren Buffett also said that it was better for individual investors to passively invest through the “buy and hold” strategy instead of trying to conduct stock trades on their own. It also cuts down on your trading costs.
Security Problems with Stock Trading Apps 🚨
It should be pointed out that many stock trading apps have security holes. Many vulnerabilities were found in smartphones that exposed accounts to hackers who could steal money, sell off stocks, and get into personal details of the user’s accounts.
So, even when it comes to the best apps to trade stocks, you can still run into vulnerabilities. New investors need to keep this in mind when shopping for the best app.
A previous report found that about 19% of the stock trading apps exposed user passwords in clear text. Other apps did not even verify the SSL certificate (the little 🔒lock icon in your browser that tells you a website is safe and secure).. It’s best to check the app’s security beforehand by checking customer reviews, looking at any “data breach” news, and checking if they have two-factor authentication.
Call Customer Service Before Investing in the Stock Market 📞
Most mobile applications today have terrible customer service. Yes, things have gotten a lot better since the days of waiting on hold for several hours, but the truth is that we have a long way to go.
And that couldn’t be more true when it comes to customer support people running the show at investing and trading apps.
While reviewing each of the above apps, I asked myself the following questions:
- How easy was it to talk to someone when I had a problem? Some apps do not have phone support, while others have chat support but it’s only available on the desktop application instead.
- When I called the customer service phone support number, were they quick to help me?
- How long does it take to speak to a representative?
Mobile trading apps should make it easy for you to get help with their app, check on your account, and security services even if they do not provide you with a live stock broker.
Do the Best Investment Apps Offer Watch Lists? 📃👀
Yes, normally the top stock apps will feature watch lists. This will show the current trading price and the recent change in activity (be it up or down).
Most mobile apps will allow you to customize your own watch lists. In this way, you’ll be able to keep track of your favorite stocks — such as amazon or apple — even if you don’t own them.
🇦🇺 Are you a stock trader from Australia? Learn about the top stock trading apps in Australia.
How Stock Apps Make Money: Payment for Order Flow:
If an online service is free, then the users are the product—this is what is often said about popular social media platforms that live off selling their users’ attention to advertisers. Payment for order flow (PFOF) is somewhat similar in the sense that it allows free stock trading brokers to exist by turning their clients into ‘the product,’ so to speak.
Here is how it works: When an investor places a trade to buy a stock on a free stock trading app like Robinhood or WeBull, the brokerage doesn’t execute the trade directly. Rather, it sends the order to its real customer—usually a financial institution like a huge hedge fund.
This hedge fund then acquires the stock for the investor using their money, and the investor becomes the owner of the shares they ordered. Essentially, the hedge fund is the middleman that processes orders and communicates between the brokerage and the stock market.
These institutions, or market makers as they are usually called, pay the brokerage to go through them with their clients’ orders. The market makers gladly pay for this because they are extremely well-versed in the practice of high-frequency trading—and if they control the order flow of retail investors, they can actually know what will happen in the markets a few seconds before anyone else.
Unlike retail investors, huge hedge funds use various trading algorithms that allow them to make small, lightning-quick trades before they execute the retail investors’ orders. These fast trades are very successful most of the time because the algorithm knows exactly what will happen a few seconds into the future—they execute their trade before the retail investors’ trades, and make a small profit every time. In summary, PFOF could be seen as ‘calling first dibs’ on stock trades.
How Does PFOF Affect Investors?
The practice of payment for order flow might sound shady but it is legal and carries some benefits and drawbacks. First of all, it allows brokers to offer free trading to clients—brokerages that don’t sell their order flow have to make money via commissions, which hurts retail investors, depending on how high those commissions are.
Moreover, this practice creates an environment where small, new brokers can emerge and create a sustainable business model in a market dominated by gigantic financial institutions that have been in power for decades. That’s how we got Robinhood and a few other inventive brokerages that made DIY investing dramatically more accessible for regular retail investors.
However, if a hedge fund is in control of your trades, that gives them the opportunity to make money at your expense. The delay between order and execution that PFOF creates means that the price an investor pays for a stock will be less favorable than it would have been if the order was directly executed by the broker. The price difference is very small and almost impossible to determine by retail traders, so most investors are just happy to be able to trade for free, even though it isn’t really free.
Whether it is right or wrong, it’s highly unlikely that this business practice is going anywhere—the biggest 12 brokers in the U.S. that use the PFOF model made a total of $3.8 billion in 2021, which is a 33% increase from 2020. Considering the rising trend, it is possible that the revenue generated from PFOF will expand even further in the future.
The Explosion of Meme Stocks
Back in early 2021, a new model of speculative investing emerged spontaneously out of the investing collective on Reddit—and it revolved around so-called meme stocks. Here is the idea: Stocks of old, well-known companies often suffer if the company has an outdated business model. One example is Gamestop (GME), a company that sold physical video game copies at brick-and-mortar stores—a business model that had been completely obliterated by online video game stores.
This company had declining revenue year over year and the stock was helplessly falling further into the abyss as time went on, so a bunch of hedge funds decided that shorting it is an easy way to make tons of money. But the hedge funds got greedy and shorted the stock so much that there was more short interest than actual shares on the market.
Short selling consists of borrowing shares, selling them, rebuying them later at a lower price, returning the shares, and bagging the price difference. This gave Redditors a great idea—if the short interest is greater than the total number of shares in existence, we just have to buy up all the shares possible, and the hedge funds who are forced to buy the shares back will have to buy from us for an obscene price. And that’s exactly what happened.
Redditors banded together and bought GME without much concern for their own well-being, which quickly drove the price from $4 to $200 in a matter of days. Some Redditors sold to the thirsty hedge funds at the right time and made a killing, while most other traders got in too late and just lost all their gains when the stock dropped back to $10 a few days after the jump.
The Risks of Meme Stocks
The idea behind trading meme stocks is for a large group of independent traders to band together and pump a stock with very high short interest. Although this makes sense on paper, it is near-impossible to coordinate this effort—it ‘succeeded’ before because investors were pushing this idea by using funny memes to constantly focus the internet’s attention on their goal.
Even so, most investors lost money, either because of bad timing or because of institutional pushback. Namely, among the hedge funds that took a hit was Citadel—one of the biggest buyers of payment for order flow (PFOF). When Citaled started losing money, Robinhood, as well as many other free brokers, either intentionally or unintentionally moved to protect their biggest customer by halting the trading of all meme stocks including GME.
Users of these trading platforms could only sell their stocks but buying was unavailable, which drove the price down extremely quickly in a matter of hours and days. Robinhood was hit by a class action lawsuit by the damaged investors later, but this is one more risk surrounding meme stocks.
The Most Commonly Traded Stocks
There are always stocks that get way more attention than others, and in this day and age, these are usually tech stocks. The 5 most active stocks in the 2021-2022 period were TSLA, AAPL, AMD, NVIDIA, and AMZN. Since an active stock is easy to trade due to high liquidity, it is always good to understand why it is so active—so what do these top stocks have in common?
First of all, these are all tech stocks—the technology sector has done exceptionally well from 2015 to 2021 because these are mainly growth stocks which are often highly volatile and promise the strongest returns out of any sector during bull markets. However, during bear markets, tech stocks tend to plummet during bear markets and periods of recession.
Moreover, tech stocks depend on 2 factors: ever-increasing earnings reports and stable commodity prices. As growth stocks, tech companies are sought after because of their growth potential, which means that their earning reports are very important to investors. Simply, if a company like Apple has better and better earnings every quarter, its high and rapidly growing stock price is justified.
The other factor is commodity prices. In 2022, when the price of oil, semiconductors, and rare earth minerals went up, this helped drive down the price of companies like Apple and Tesla. This is because these tech companies use pricey materials to develop their high-tech products, and that also requires a lot of energy—if the prices of, say, oil and nickel are up, this will inevitably reduce the company’s earnings, and thus, its stock price.
All in all, the stocks with the highest growth potential are usually dependent on outside factors for their success, and that success doesn’t last forever. Jumping on the tech stock bandwagon at the right moment is extremely profitable as we have seen in the past, but getting in at a bad moment can be dangerous, so always tread carefully.
Stock Trading Terms You Need to Know
Everyone should invest but not many people do. One of the reasons for this is that investing seems extremely complicated because of its jargon—but it is not really that complicated when you start getting into it. Here are some of the commonly used terms in trading that might seem totally unclear to new traders.
The difference between the highest price that the markets are willing to buy shares at and the lowest price that markets are willing to sell at.
An order type that makes sure that a trade is executed for the exact quoted price or better. For example, if a trader wants to buy a stock and places a limit order at $55.40, the order will either be executed at that price or lower, or it won’t be executed at all.
An order type that makes sure that a stock is bought or sold as quickly as possible, at whatever price is available at the moment.
Good Till Canceled Order (GTC Order)
A version of a market order that remains open until it is completed or canceled.
A measure of how much a stock moves up and down. The more volatile the stock, the greater the potential risk and reward for trading it.
A measure of how often a stock is traded on the markets, or in other words, how easy it is to buy and sell a stock.
The number of shares traded in a unit of time. Greater trading volume means greater liquidity, and strong upward and downward price trends are usually followed by an increase in trading volume.
Betting that a stock will become more valuable, either by buying it outright or purchasing a call option.
Betting that a stock will become less valuable, either by shorting it or using a put option.
Market Capitalization (Market Cap)
The total value of all shares of a company.
A company’s publicly traded shares that are in circulation.
IPO stands for Initial Public Offering—a stock that has been offered for public trade on the stock market for the first time.
Margin / Leverage
Debt used for trading. Using margin means borrowing money from a broker to make a trade. Leverage is a term that means the same but is used more in forex trading. Note that this money is borrowed at an interest rate and that it can augment profits and losses—an ill-placed, overleveraged trade can destroy traders’ trading balances, so be very careful when using it.
The moving average is a common indicator used by traders to measure price trends. This indicator creates a price line on a chart that represents the average price of a stock for a given time period.
Wrapping Up: Which is the Best Stock Trading App For You?
Once you decide what investment style you want to go with, there are a number of best investing apps available. Breaking into the stock market, regardless of your age, is great for your personal finance, if done right.
Whether you want all of the options available or you want a totally hands-off stock investment experience, new investors need to consider costs, fees, security, mobile experience, and customer service before opening a brokerage account via your mobile phone. 📱
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