For some retail broking firms, the share of revenue from mobile trading platforms has increased to 10-35% of their total revenue (read more here: bit.ly/2dP2BZD). This shift to a faster, more accessible transaction platform has been happening over the past 5 years, and broking companies are seeing vertical growth in registrations and downloads.
As familiarity with equity assets increases, popularity of digital platforms, specifically the mobile platform, is on the rise thanks to its convenience. But despite all the advantages of apps, there are caveats. Here are three things that you have to be careful about while logging into that digital trading screen.
Passwords and safety
This may sound rather basic, but it applies to all sensitive digital financial transactions. There are multiple passwords to manage and secure. As a first step, always create a password that is alphanumeric and is also one that you can remember.
Creating a logical series works well if you have to periodically change your password. Arun Chaudhry, vice president and head - online business and product development, Motilal Oswal Securities Ltd, said, “Our strong password policy ensures safety of customer accounts along with a second level of authentication while placing trades. The authentication is designed to enable one-touch access to add convenience.” Most of the digital broking platforms—app-based or Web-based—require two levels of authentication and this makes them more secure. Ensure that you choose a platform which has this feature.
Periodic prompts to change passwords are a recommended feature. Don’t share your account details and passwords with others. Access to trading and demat accounts is like giving someone access to your savings in the bank. Caution is advised.
Don’t over-indulge
Mobile trading platforms are a more convenient way of monitoring your portfolio and transacting, but they are not any more efficient in delivering returns. Returns are a function of stock selection, and that is a function of research and analysis. C.V. Ganesh, chief operating officer and head-digital business, HDFC Securities Ltd, said, “Trading on mobile devices has surged thanks to the intuitive simplicity and deep personalization of the experience, which is often empowering and convenient. However, this power is to be exercised with caution as having market access around the clock can become an addiction and a distraction....”
Avoid the urge to be constantly active on the app. Among other things, Ganesh advises caution while placing trades—rather than doing so in a hurry—to avoid accidental trades. Put in stop losses and where available, choose ‘good till date’ orders. Such an order (buy or sell) is given at a pre-fixed price and remains in the system either till that particular price is achieved or till the specified date. This way,the investor can be sure that the transaction will go through only at the price chosen.
In a mobile platform, you have to monitor all the details yourself, so make sure to input them carefully, according to your preference rather than getting swayed by the notifications that pop up. Transacting too frequently, because it is convenient, can add to costs and lure you into making the wrong decisions by selling too soon or buying without adequate research. “One should never invest based on general recommendations. Your long-term investments should be based on customized expert advice, after considering factors such as life goals and risk appetite,” Chaudhry said.
Network and hardware
Apps are convenient, but they are also very dependent on data networks. This means, if you are travelling outside major cities in the country, connectivity could be slow. While that isn’t a problem by itself, because trades will still go through, what you need to be careful about is updating the page. Chaitanya Shahare, head, IIFL Markets App, India Infoline Ltd, said, “If connectivity is low, one shouldn’t assume that the page has refreshed automatically; it could be displaying prices from a few minutes ago.... Sometimes a page can load from an older cache; be careful to refresh often.” The hardware or phone you use also matters. The more compatible the phone, the better will be your experience in using the app. Nithin Kamath, chief executive officer, Zerodha Ltd, a discount brokerage, said, “One needs to have at least a 3G -enabled phone to utilize apps efficiently. You have to invest in a good device, especially as you are already taking risks with your money in equity.”
Apart from convenience and usability, trusting the broker and availability of the research also matter. Don’t download too many apps; pick one that suits you and learn to use it productively.
