Author: Chris Hood
Be sure to check out new episodes of my video podcast each week, where my ace pupil Brian Jones and I talk the ins and outs of options trading- and give you insights and strategy that you can immediately put to work for you in the markets.
I started trading back before all of these newfangled free broker platforms. Then, all of the technical tools for retail traders were primitive at best.
You newer traders have no idea how good you have it.
However, the one thing that I’m glad we didn’t have is phone trading apps.
I can hear the younger traders on here muttering under their breath.
“What a crotchety old-fashioned boomer.”
And I can hear you rolling your eyes through the screen.
You heard that right. I can HEAR it.
Why do I dislike phone trading so much?
It exaggerates the GREED and FEAR responses that undermine proper trading. It works against thorough planning and encourages overtrading.
Open any phone-based brokerage platform and notice what you see. Unrealized gains and losses are moving up and down in real-time.
Bright reds and greens. Giant shiny buttons invite you to ‘BUY’ and ‘SELL’ positions.
It’s just like a video game that encourages you to make split-second decisions. But, of course, those who develop these platforms know this. So they add as many bells and whistles as possible to make it exciting.
As a result, it leads retail traders to focus on the wrong things.
Unless you’re a day trader, there is no reason to look at your positions more than a couple of times a day. And you should not be looking at your P/L or our net liquidating value.
Those numbers can fluctuate wildly due to volatility or low liquidity in the market.
Staring at your phone, as so many do, is simply a recipe for disaster. Of course, this just makes you want to trade, and that’s how brokers make money.
Most new retail traders are best off entering, managing, and exiting trades based on the daily chart. That means that you’ll react to the underlying price movement from signals that print at the end of the day.
Unless you have alerts set in advance, nothing that happens intraday should trigger any action.
If you enter on the day chart, then manage your trades in the same time frame.
While I’m on a rant here, I’d like to say that planning is the most crucial part of trading. Plans should be built when the market is closed – either early in the morning or later in the evening.
And these plans require significant chart analysis using the proper tools.
Oddly enough, this is usually the least powerful feature of any trading app. The charting ability is almost non-existent.
Sure, you can look at some tiny graphs and perform meager analytics. Still, nothing I’ve seen yet compares to what’s available on a desktop or laptop.
In the comfort of your office, when the market is closed, you perform your analyses and decide what trades are in the queue for the next day.
Not when the noise of the market is playing havoc with your emotions.
I love both trading and smartphones, but not together.
Technological innovation has created some innovations that probably shouldn’t exist. For example, just because you can watch movies and play video games while driving doesn’t make it a good idea.
I put phone trading in the same category.
As I stated at the beginning, this idea may seem at odds with modern culture. However, so are many of the traits that lead to profitable trading.
Patience, emotional control, delayed gratification, and persistence.
All are in short supply for the average person, but if you truly want to become the best you can, then work to cultivate them.
I promise it will pay off in the long run.