3 Reasons Why Mobile Forex Trading May Not Be Such a Great Idea
Like it or not, the topic of mobility is here to stay. Whether it’s checking your email on your smartphone or checking out the latest posts on Facebook, being able to tap into the digital world while on the move is a hot topic that is only growing in popularity.
But it doesn’t stop at emails and Facebook. The idea of being able to trade Forex from a mobile device has been around for years and is also growing at a fast pace. Most of the major brokers offer it in some form or another and are serious about promoting it as an advantage.
But is it really an advantage?
Sure, it may be convenient – to have the ability to check your positions and keep an eye on any new price developments. However, I would argue that calling it an advantage is a bit of a stretch. In fact it may even be hurting your trading performance in more ways than one.
Today we’re going to discuss three reasons why mobile trading may not be such a great idea when it comes to managing your trades. And while not everyone will agree with my views on the topic, the points outlined below are at least something to consider the next time you reach for your phone to manage your trades.
Size Matters
The size of the monitor(s) you trade with is important. For me, I use two 23 inch LED displays. The size is big enough to see my charts clearly but not so big that it causes my eyes to wander.
The LED technology is also a huge plus over older LCD displays when it comes to visual fatigue. This allows me to spend time in front of my computer without tiring out my eyes.
Now compare this to the screen on your mobile phone.
Don’t get me wrong, I’m sure the resolution on your phone looks great, but the small size of the screen will be a hindrance when it comes to analyzing your charts.
This causes a price pattern to look great on your phone but perhaps not so great on your desktop and vice versa.
As a side note, you may find that tablets are suitable due to the larger screen size. That said, I’m still opposed to trading from one as I simply don’t see the need. More on this later.
One of the benefits of trading raw price action is being able to remove the indicators that clutter your chart. These indicators take up a lot of real estate on your screen, so removing them allows you to see the entire chart – a huge benefit if you want to trade price action.
Using a phone to trade Forex negates this benefit entirely. Even if you remove the indicators from your charts, the small screen size will be a limiting factor when it comes to identifying favorable price patterns and trade setups.
A Distraction-Free Zone is a Must
There is no shortage of lessons on various trading strategies around the web. A query using your favorite search engine will pull up thousands of pages, each one showcasing a different strategy.
But one thing you don’t see very often are discussions about what a proper trading environment entails.
Two key elements of that environment are sound and sight. When it comes to the environment in which you trade, these are by far the two most sensitive. They are also the two elements that will have the most drastic impact on your trading performance. Whether that change is positive or negative depends on the specific environment, of course.
Let’s start with sound. For me, it’s all about listening to either classical music or soft, ambient sound tracks. These are similar to the tracks you might hear at a spa.
This helps to get me in a relaxed, neutral state of mind so that I can really focus on my trading. No dogs are barking (just one dog sleeping next to me), horns honking or people talking to me. I’m 100% “in the zone”.
Speaking of being in the zone, if you haven’t read Trading in the Zone by Mark Douglas, you’re missing out. It’s a must-read in my opinion.
As for the visual environment, I have a big office window to let natural light in but that’s about it. Of course, there are other things in my office, but there is nothing visually distracting about the environment in which I trade.
Most importantly, this environment doesn’t change. I know where everything is each time I walk into my office. This alone gives me a level of comfort that allows me to relax.
Let’s switch back to mobile trading for a moment. What does that trading environment look like?
Who knows, right?
It could be on a bus or a taxi, or perhaps in a shopping store. Regardless of where it is, the audible and visual distractions are endless. It might be the noise of traffic, people talking or loud music, all of which will distract you from your primary focus – trading.
Too Convenient for Your Own Good?
I love the idea of convenience. I don’t think there is a person on earth who would complain that something should be made more difficult because it’s too convenient.
Unless of course that something is mobile trading and that person is me.
The whole premise of mobile trading is built and marketed around convenience, and I get it. The idea that you can check in on your positions, get in or out of the market, or even set pending orders from any place at any time sounds great from a practical standpoint.
But what if it’s too easy?
Yes, that’s right. I said it. What if trading from your mobile phone is so convenient that it actuallydissuades you from taking the time necessary to properly analyze a market?
Put that way it doesn’t sound so crazy after all.
We all know that fast food isn’t good for us, yet it’s remained one of the fastest growing industries for years.
Why?
One reason is that it’s convenient. The ability for a person to drive up, pay less than $10 and have a piping hot meal in their lap within minutes is a huge time-saver. Not to mention you never even have to get out of your car.
But even though it saves time and money (debatable these days), it still begs the question – should we be doing it?
Of course, that’s a very personal decision that everyone has to make for themselves. However, one thing that isn’t quite as subjective is the fact that fast food isn’t good for us. We all know this, but the convenience often outweighs the health considerations.
Which brings me to an important point. Who do you think benefits more from fast food, the people ordering it or the fast food companies selling it?
Perhaps that’s a rhetorical question when you really think about it. But put into context, what if your broker’s mobile trading platform fits a similar mold? What if that platform has been made so convenient that it is actually detrimental to the health of your trading account?
Just some food for thought (no pun intended).
The Solution
The benefit of trading on the go, or at least the one that is marketed to Forex traders, is the ability to manage your trades when you’re away from your office.
But if trading from your phone isn’t a great idea, what is the solution to being able to manage your trades while on the go?
The very first thing you can do is to make the switch to the higher time frames. By doing this, you eliminate the need to constantly check your trades every 15 minutes. Instead, you only need to check your charts three or four times a day, possibly as little as once a day.
This alone will drastically cut down on the screen time necessary to manage your trades.
Another way to avoid needing to use your phone to trade is to always use a hard stop. This may sound obvious, but using stop losses is one of the more overlooked safety features when it comes to trading Forex.
What is a “hard” stop, exactly?
It’s a stop loss you enter on your trading platform that automatically removes you from a position in the event the market moves against you. This differs from a mental stop loss whereby you must manually close a position once it reaches your predetermined threshold for a loss.
By using a hard stop, there really is no need to check on your position on your phone. In fact doing so will only exacerbate any emotional tendencies you may have to pull a trade prematurely.
Last but certainly not least is proper position sizing. If you know that your exposure is minimal and inline with your trading plan, there is no need to constantly check a position via your phone. Your stop loss is more than capable of managing your risk for you in the event the market moves against your position.
There is, of course, the debate about entering a predetermined trade setup from your phone. Perhaps it’s a setup you’ve been waiting for the market to confirm for days or even weeks, and, of course, it confirms while you’re away from your office.
In this case, my strategy is simple – do nothing.
If I’m not in a distraction-free environment with a screen large enough to clearly see my charts, then I have no business risking my hard-earned money.
I know that the market will still be here tomorrow, producing an endless stream of favorable opportunities. My trading capital, on the other hand, is not so endless.
Final Words
The idea of being able to trade while on the go sounds fantastic. After all, you aren’t always going to be sitting in front of your computer to catch every opportunity that comes along.
But the disadvantages of mobile trading just might outweigh the benefits.
The environment in which you trade needs to be free of distractions. It should be a place where you can feel relaxed in order to focus on the task at hand – something that trading from your phone doesn’t allow.
Your broker’s primary goal is to get you to trade; that’s how they make their money. So of course offering you the convenience to trade from your phone, which in turn generates more trades, is a logical choice for them given their business model.
But I doubt you will find it as beneficial to growing your trading account as your broker will find it to growing their bottom line.
I’m not saying that mobile trading is a bad choice for every Forex trader. At the end of the day, it’s a personal decision and one that only you can make. But just because you can do something doesn’t always mean you should.