Step-by-Step Guide to Start Using Stock Trading Apps for Beginners
In recent years, mobile stock trading apps have exploded in popularity, appealing to a new generation of investors thanks to their intuitive design, low costs, and barrier-free access to the financial markets.
As technology has improved, these apps have become sophisticated platforms that allow individuals to conveniently invest in stocks, exchange-traded funds (ETFs), derivatives, and other securities directly from their phones.
For those looking to dip their toes into the stock market for the first time, a trading app provides an accessible entry point that removes the complex procedures and large investments required by traditional brokerage firms.
With many top apps offering zero-commission trades, simplified onboarding, fractional share investing, and top educational resources, it’s never been easier for first-time investors to build a balanced portfolio.
This guide will explore how to get started with stock trading on mobile apps, outlining key features to look for, account setup steps, conducting research, placing trades, utilizing the available educational content, and more.
How to Choose the Most Suitable App for You?
The first step is choosing a suitable stock trading app for your needs as an investor. Ideally, look for an app that offers zero-commission trades, strong security features, robust research and charting tools, and top-notch educational resources. Having an easy account opening process with minimal paperwork is also ideal for new investors.
Some key features to consider when comparing alternatives include:
- Account minimums: Many leading apps allow you to open an account with no minimum deposit. Traditional brokerages may require from $500 to $2000 or more.
- Available account types: Most apps offer Individual, Joint, IRA, and Trust accounts. Make sure that the types of accounts you need are available.
- Asset classes tradable: The best apps offer access to financial assets including stocks, exchange-traded funds (ETFs), options, mutual funds, and cryptocurrencies. However, not all apps support the same instruments.
- Educational resources: Look for service providers that share articles, videos, tutorials, glossaries, and paper-trading simulations to enrich your trading knowledge.
- Customer service options: Look for apps that offer telephone, email, and even chat support and rich Help Centers that allow you to troubleshoot any issues that come up during your journey without having to wait days for a support ticket to be responded to.
Take the time to thoroughly compare a few leading stock trading apps to find the one that best suits your investing needs at the time.
3 Steps to Start Using a Stock Trading App
Most stock trading apps offer expedited onboarding procedures and user-friendly trading interfaces that cater to beginners in the first place. Here’s a step-by-step guide that illustrates how easy it is to start using these apps.
1. Opening and Funding Your Account
Once you’ve selected a trading app, opening an account is generally simple and can be done completely digitally in minutes. You’ll need to provide your personal details, contact information, and Social Security Number (SSN) along with answering some basic questions to establish your account. Needless to say, you must make sure that a version of the app is available for the mobile operating system that your smartphone uses – i.e. iOS, Android, etc.
Next, you’ll probably have to link your bank account to transfer funds and enable instant deposits. Many apps also allow users to link a debit or credit card to deposit funds faster. Just keep in mind that deposits made via a debit card usually incur a small fee.
Depending on the app, your initial deposit may become available for trading instantly or could take 4-5 business days to be fully cleared. It’s good practice to fund your account with a larger initial deposit rather than minimums if possible. This gives you flexibility to diversify your first investments.
Leading stock trading apps also offer robust security, including encryption, two-factor authentication (2FA), Face/Touch ID logins, and other measures to protect your account and data.
2. Perform Research and Due Diligence and Pick Your First Investments
One major benefit of trading apps is the huge amount of curated financial data and news available within their interface. This allows you to conduct stock, ETF, and fund research seamlessly without having to visit external sites and from anywhere you are.
Top apps provide real-time pricing data, interactive charts, volatility and volume metrics, earnings transcripts, analyst ratings, breaking news alerts, sophisticated options trading tools, and more. You can look up detailed profiles on thousands of stocks and funds to review and analyze their financial metrics, historical performance, latest news, and key technical indicators.
Monitoring real-time pricing data and charts lets you check intraday movements and spot potential entry and exit points for your prospective trades. You can also set up custom stock alerts and price triggers to receive notifications when an asset hits a specified threshold.
3. Execute Trades
Once you are ready to trade, placing basic buy and sell orders on a mobile trading app is a pretty straightforward process. You simply search the stock symbol you want to trade, enter the number of shares or dollar amount, then tap Buy or Sell and confirm the order.
Most trading apps allow you to trade stocks, ETFs, options, mutual funds, and fractional share amounts on major exchanges like the New York Stock Exchange (NYSE) and NASDAQ. You’ll also have access to different order types like market, limit, and stop-loss orders to tailor your trading strategy.
If you change your mind, it is often possible to cancel or edit open orders that haven’t been executed yet. You’ll receive instant fill notifications when trades execute, and you can view all completed transactions in your account history.
With some practice, even investing newbies can grasp the essential workflows for executing simple trades through a mobile app fairly quickly. Just be sure to start small with investment amounts you are comfortable with.
Pros and Cons of Trading Apps
Trading apps provide many potential benefits that appeal to new investors but also come with some downsides to keep in mind.
On the positive side, trading apps offer:
- Convenience through managing everything from your phone.
- Low account minimums and commission-free trades.
- User-friendly design and workflows.
- Educational resources in one place.
- Real-time data and notifications.
- Fractional share investing.
Meanwhile, some potential drawbacks include:
- Potential lack of advanced trading features and tools.
- Limited customer support channels.
- Security risks if proper precautions are not taken such as accessing your account from public internet hotspots.
- Some apps use gamification that may end up prompting users to overtrade.
- Apps are exposed to outages preventing trades during volatile market sessions.
As with most things, there are some tradeoffs to consider when using a mobile trading app. However, they can be an excellent starting point for first-time investors to conveniently access the financial markets.
Mobile stock trading apps have opened up investing to a whole new demographic group of young traders thanks to their accessibility, low costs, and available educational resources. While doing proper research beforehand is still imperative, downloading a trading app facilitates the process of getting started for those seeking to test the waters of the financial markets.