Until recently, the idea of managing stocks and shares from your mobile device – in effect, having a dealing room in your pocket – would have seemed 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. 

But, 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 (see section below), 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:

• What investments do you want to trade? For example, stocks and shares, investment funds, or more sophisticated investments (such as contracts for difference)?
• If you’re new to investing, does the app allow you to practise 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?
• How user-friendly do you find the app?
• Can you use the app to trade tax-efficiently through a stocks and shares ISA?
• Is your app regulated by the UK’s Financial Conduct Authority (FCA)?
• Are there any extra benefits/rewards?

Trading apps for various scenarios

The trading app market is getting crowded. Last year, for example, the investing platform provider, AJ Bell, created Dodl – a competitively-priced investment app aimed at a more novice investing audience.

Earlier this year, Bestinvest launched a free mobile app to enhance its existing trading platform which it revamped in 2022.

Here is a selection of apps that cover a range of scenarios, from novices to more sophisticated investors.

1) eToro – good for beginners and social

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.

eToro also allows users to follow and even copy the trades of legitimate investors with proven track records. FCA regulated.

Related: How To Buy Cryptocurrency

2) Freetrade – good for easy investing and guides

Freetrade’s basic service offers commission-free trading and provides access to large and mid-cap stocks in both the UK and US, as well as initial public offers (IPOs) and special purpose acquisition companies (SPACs). 

It also provides limited access to a range of companies listed on the German, Finnish and Dutch markets. 

Three tiers of plan are available with different fees applicable to each: basic (free); standard (£5.99 pm) and plus (£11.99 pm). There is considerably wider investment choice including all other London-listed shares as well as access to all other European shares. FCA regulated.

3) Fidelity Personal Investing – good for funds

Fidelity enables investors to choose from over 2,500 funds, as well as shares from the FTSE 100, FTSE 250, FTSE All-Share and FTSE AIM 100. Other available investments include investment trusts, exchange-traded funds (ETFs) and some Irish shares. 

The service allows a user to link family members’ accounts to see everything in one place, while a Watchlist tracks the performance of up to 50 investments at any one time. FCA regulated.

4) Trading212 – good for practising trades using virtual money

Trading 212 offers unlimited commission-free trades with access to over 10,000 stocks and ETFs from the UK, US, Germany, France, Spain, Netherlands and other markets. 

For those looking for more sophisticated investments, Trading 212 also offers over 3,000 contracts for difference (CFDs) on stocks, forex, gold, oil and indices. 

Users can start with a free, lifetime practice account that uses virtual money. FCA regulated.

5) IG – good for more experienced investors

IG allows users to trade on more than 17,000 global markets, including shares, indices, options and commodities. 

It features interactive charts, news, automatic trading alerts and real-time signals. Users can spread bet or trade CFDs on commodities, and options trading is available on various assets timed daily, weekly and monthly. FCA regulated.

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 CFDs 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. 

Two factors have helped accelerate this phenomenon. First, the evolution of increasingly powerful smartphones, and second, the rise in the number of share trading apps.

The figures are significant. According to analysts App Radar, there were an estimated 3.1 million Android downloads of the top 10 UK investment apps via Google Play Store in 2020/21. 

App Radar doesn’t record iOS figures, which account for Apple users. But it says the split between Android and iOS downloads is about 50/50. Taking this into account, App Radar estimates that, overall, there are now around nine million people using trading apps in the UK.

Rise of apps

Some of the newest investment trading services, offered by ‘neo-brokers’, are only available via a mobile app.

To keep pace, providers of traditional, desktop investment platforms have developed their own trading apps for customers to use.

The largest traditional UK platform, Hargreaves Lansdown, says its app had nearly 700,000 users at the end of 2021. It says more than a quarter of a million clients use its app daily. 

One of the key features of Dodl, launched last year by Hargreaves Lansdown’s rival, AJ Bell, is that it will allow investors to buy shares ‘commission-free’.

Commission-free trading has become a major selling point for trading apps that rely on other fees to make their money. See below for more information about trading charges in general. 

Charges, however, should not be an investment app user’s sole focus.

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 dollars – then you’ll probably be charged a currency fee for doing so. 

Meanwhile, if you’re an infrequent trader – say you take a year between trades – 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 totally 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.

If sheltering your investments from tax is a primary concern, make sure your provider has the scope to offer a stocks and shares ISA – a wrapper that allows an annual allowance of £20,000 of shares and funds to grow tax-free.

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 “our findings caution against the indiscriminate use of smartphones as the key technology to increase access to the financial markets”.

Frequently Asked Questions

What assets can you trade on investment apps?

It’s possible to invest in a large range of assets on investment apps, everything from stocks and shares (both domestic and overseas), to investment funds (including index trackers and exchange-traded funds) to more sophisticated trading instruments such as contracts for difference (CFDs) and forex.

Are investment apps worth it?

If you’re an investor who’s continually on the move and are comfortable working from a relatively small screen – instead of preferring a desktop arrangement – trading apps certainly provide the convenience of having a small trading floor in your pocket.

Whether they are ‘worth it’ depends on an individual investor’s needs. There’s little point opting for an app if the provider in question is unable to supply access to the requisite markets for all of an individual’s requirements. Trading fees are another consideration. As mentioned above, charges come in a variety of guises. So, before signing up, it’s worth investors checking that an app fulfils a range of needs to ensure their experience is optimised for their investing journey.

Are investment apps safe?

Investment apps usually offer good protection in that they are often password, PIN and biometrically protected. This would make it hard for someone to access an account holder’s details, even if his or her phone was stolen.

All of the providers highlighted above are regulated by the Financial Conduct Authority, the UK’s financial watchdog. In the event that an app provider went out of business, it should be possible to claim compensation up to a limit of £85,000 via the Financial Services Compensation Scheme.