Stock trading in Asia has never been more popular than today. Stock market indices are at all-time highs, partly driven by record-low interest rates. This leads to greater participation by investors, including high net worth individuals, institutions, and even retail traders who would not have traded before because of access problems.
To help this growing number of active Asian stock traders, there’s a proliferation of new online applications that claim they can give them an edge over other traders. These programs have unique algorithms designed to instantly spot profitable trades after significant news events or company announcements.
But are these automated programs worth the money? Do they make you money, or are they just a waste of time and money?
There are some advantages to using such apps as they can save you time and help with compliance since the software would do all the hard work for you. Moreover, they can also provide high-quality advice, minimizing your chances of making mistakes when trading online.
Stock trading required constant attention to news sources, looking up prices by hand using cumbersome tools like Reuters or Bloomberg, communicating over the phone, and physically going to the place where your stocks were traded (the stock exchange).
Your investments are easily accessible from nearly any computer or smartphone. You don’t have to go anywhere or talk to anyone. With trading software, you can check prices and news in mere seconds for free.
Another major advantage is that it has many lower fees than traditional brokers. For example, E-trade only charges $9.99 per trade when its listed price is $9.99 + $0.75 = $10.74 but the full price is actually $9.99 + ($9.99 x 0.75%) = $10.74075 . By contrast, a traditional broker like JP Morgan typically charges at least $6.95 per trade, which would result in a cost of $9.95 + ($9.95 x 0.0005) = $10.005 but the full price is actually $6.95 + ($9.95 x 0.01%) = $9.955 .
By using a discounted online broker instead of a traditional one, you can save money on fees for every trade you place and ultimately gain more from your investments long term if they do well because you will be keeping more of their profit instead of giving it to your broker or investment company as commissions and markup charges that are often hidden from the consumer.
For all its conveniences, stock trading software has also created new risks for those participating in the stock market.
If you are looking for more research-oriented software, you might need to look elsewhere. Although many novice traders are okay with the bare minimum, many seasoned professionals might miss having access to more complex tools. At the same time, most online brokers provide similar tools for charting and technical analysis.
Another disadvantage is that there are new risks involved with trading stocks online. For example, hackers could intercept your account information by gaining access to email addresses and passwords used when registering for online services.
Digital information, while easy to copy and access, is also easier to lose; many people had lost their investments when their computer crashed or it was stolen. Information backed up on an external source like a portable hard drive could be lost in the event of theft if it isn’t secured correctly.
These kinds of apps are only as good as the data they work with, which could be incomplete or biased depending on who creates it in the first place. There is also no guarantee that they would outperform other traders because markets are very unpredictable by nature.
The bottom line is you should use them as a guide only and learn how to become more self-aware of your abilities. If you need any help with trading stocks, we recommend using a reputable online broker from Saxo Bank and practicing different forex strategies on a demo account before investing real money.