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 Retail foreign exchange trading has grown rapidly in recent years,
but the image has been of a lone trader in front of a computer
screen. Smartphones, owned by around half the world's adults, are
changing that.
Mobile trading makes up about 60 percent of transactions, up from 10
percent four years ago, at London-based broker Trade 212, whose app
has been downloaded over a million times. More than a fifth of
clients trade only on smartphones or tablets.
"We are seeing a big number of clients who are not only mobile
first, but mobile only," said Ivan Ashminov, Trade 212's co-founder.
Like others, Trade 212 offers demo accounts allowing users, largely
male and mostly aged between 25 and 45, to practise with fake money.
Many have no previous trading experience, Ashminov said.
Faheem Bismal, a 32-year-old father of two from Glasgow, sold his
chain of convenience stores and restaurants two years ago to focus
on property investment and trading currencies. He trades on broker
FXCM's smartphone app on the school run and in bed before he turns
out the light.
When he only traded on his desktop and could not check the market
when he was out and about, he was less successful, Bismal said. But
he warns that the ease and accessibility of trading apps can be
dangerous.
"I see guys sitting on their phones just tapping away, being in and
out of the market within seconds or minutes ... and losing all their
money. If you're going to use the app you have to use it very
sensibly."
In 2013, the Bank for International Settlements estimated the value
of retail currency trading at about $185 billion a day, or 3.5
percent of the market. Industry analysis website Finance Magnates
reckons that figure is now closer to $320 billion. Smartphones, it
seems, are helping drive growth.
Almost 40 percent of trading at IG, one of the world's biggest
retail FX platforms, is done on mobile devices, up from around 20
percent three years ago. In April, the firm became the first to
offer a trading app on the Apple Watch, which vibrates when a
user-set price is reached.
GAMIFICATION
Some critics say "gamification" has made some trading apps appear
more like harmless fun than opportunities to lose large sums. They
argue it entices people with no knowledge of markets to expose
themselves to risks of which they are not fully aware.
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When the Swiss National Bank removed its currency cap in January,
many retail traders suffered heavy losses, having held highly
leveraged positions on the euro against the Swiss franc. Most of the
retail traders Reuters spoke to about their losses had used
smartphones for at least some of their trading.
But some argue that rather than encouraging reckless gambling, the
new generation of apps, designed for smartphone users rather than
modified from desktop sites, provide a less complex, safer
environment for retail traders.
Flick A Trade is one trading app that looks and feels like a
traditional computer game, complete with tense music and sound
effects. It offers trading with "funny money", while in "real money"
mode trading sessions are limited to 3,000 pounds ($4,600), with
losses not able to exceed bets.
"Over the years I have seen numerous black swan events ... which
wreck not only retail investors but many companies, big and small,
offering leveraged trading," said Flick A Trade founder Kerem Ozelli.
Mobile trading apps can also give traders access to the same
technology that until now has been reserved for the big banks.
"The lines between retail and institutional trading are becoming way
more blurry," said Jannick Malling, CEO of Tradable, a company that
allows users to trade directly from news and analysis apps rather
than via a separate broker's app.
"Back in the day, only the institutions had access to the best tools
in the marketplace ... and that's becoming completely democratised."
($1 = 0.6466 British Pounds)
(Editing by Nigel Stephenson and Catherine Evans)
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