On trading apps

Gone are the days of paying $25 per brokerage trade – what a big daylight robbery. With today’s tech driven efficiencies and increased competition, traditional brokerages have limited runway left.

In the past, I’ve recommended using Stanchart for trading Singapore stocks. Several years back, Stanchart Online Trading had no minimum commissions, which made trading on their app accessible for those with limited sums to invest.

Today, the minimum commission per trade is $10 with them unless you’re a priority banking customer.

Other banks like DBS (with Vickers Cash Upfront) and FSM One also ask for between $8-$10 per trade, and if you make 5 trades a month that’s $600 gone every year – still too expensive. If you’re investing $6000 a year that’s 10% lost in returns before you even started.

On foreign stocks, it might cost even more.

Low cost brokerages have entered the scene in recent months. I’ve been using Interactive Brokers (IBKR) for 2.5 years, it’s still my go-to broker of choice because of their reputation, global presence, low commissions, brilliant investment analytics and low borrowing costs.

It’s not the most user-friendly trading platform, so sometimes I hesitate to recommend in full, but they serve my needs really well. Kyith from InvestmentMoats also uses it extensively.

Since then, newer players like Tiger Brokers and Moomoo have entered the scene, this time promising an even better trading experience with their sleek UI, fast and user-friendly cross-platform app, and great charting interface (those that do TA will love it!).

They were very aggressive with their marketing campaigns. Tiger offered huge deposit bonuses with vouchers (S$30-S$100) to offset against your stock purchase. Moomoo offered a free Apple share (~US$133) on sign up. The virality loop kicked in, people referred their friends, got more rewards, and their friends referred even more friends, and so on.

Are they good? Well, as a trading app, they are phenomenal. Tiger and Moomoo both have super charting interfaces and they are much cheaper to trade on – commissions are less than $5 per trade and could go as low as US$1 per trade for US stocks and ETFs.

It’s super cheap for frequent traders – it’s 3-5x cheaper than what Stanchart/DBS/FSM has to offer, almost 12-15x cheaper than traditional brokerages and that means you can trade with lower sizes, trade more frequently, and break-even/make a profit more easily.

The problem, personally, is that these trading apps make it too easy to trade and speculate. If you’re a long-term investor, you’ll be tempted to chase high growth/momentum stocks and trade excessively.

The newer apps make it almost too easy to trade and speculate – a popular stock list, options and top industries on the front page. You see up-only charts that distort the reality of markets, and you just need to click the bright trade button and you’ll be off making money in one click. It’s just too fun.

So I have a bit of mixed feelings right now – yes I love low fees and sleek apps, but I also don’t want to be suckered into trading excessively. The market is a zero-sum game, for every winner there’s a loser on the other end of the trade.

I am a bad trader anyway, I always sell too early and buy too late, so I stick to the boring ones.

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