As online share trading grows rapidly in Australia, with investors turning in increasing numbers to digital platforms, they must first carefully consider which platform to use, based on criteria around risk, features, innovation and technology.
Digital trading platforms enable investors to trade from anywhere at any time, and many offer low fees, advanced trading tools and educational resources that enable informed decision-making.
According to Matt Wilson, chief market strategist at trading platform provider moomoo, “Seventy percent of respondents to our global user survey in January said they wanted to trade more frequently in 2023, while 84 percent said they wanted to transfer more funds into their trading accounts this year.”
Risks to review when evaluating platforms
Share trading platforms can carry a number of risks that potential investors should address when determining which one to use:
- Security and fraud risk: Online trading platforms may be vulnerable to cyber attacks and fraud, which can lead to the theft of funds or personal information.
- Regulatory risk: The Australian Securities and Investments Commission (ASIC) regulates online trading platforms, requiring them to comply with certain standards and regulations. Investors need to make themselves aware of any regulatory changes that may affect their investments, such as changes to margin requirements or disclosure rules.
- Technical risk: Technical issues or downtime impacting online trading platforms can stop investors accessing their accounts or making trades. Investors should trade with a platform that has the technical capabilities to ensure they do not miss out on any trading opportunities, but is also equipped to handle high volumes of traffic.
- Hidden fees: While some trading platforms boast zero or low-commission brokerage fees, they may have hidden fees. These may include deposit and withdrawal fees, ongoing account fees, exchange fees, margin fees and platform feature fees.
Assessing these risks and making the correct decision about which platform to use is particularly important during turbulent circumstances.
“Given the volatile market conditions we are experiencing, it’s never been more important for investors to understand their risk and strategy so that they can make smart investment decisions,” said Wilson.
Mitigating risks to realise the potential of online share trading
According to Wilson, the moomoo platform incorporates a range of robust security features including two-factor authentication and encryption.
The business also holds user funds in a segregated trust with HSBC – keeping them separate from moomoo’s own funds and protecting them in the event of insolvency.
Furthermore, moomoo has scaled to support more than 19 million users globally with trading tools, and provides an application interface that enables users to place orders in less than one second. Users can also open accounts online in just a few minutes.
The product features real-time market data, news and analysis, as well as educational resources and tools.
Moomoo also aims to ensure transparency in pricing by providing information on its fees and charges on its website, so users can consider them before making trades.
Consider depth of functionality and user experience
Depth of functionality and quality of user experience are other issues investors should consider when evaluating digital investment platforms.
For example, in many cases earnings information is distributed across several locations rather than being sorted according to investors’ individual preferences.
This makes it easy to miss investor days or company updates – particularly during earnings season, when hundreds of companies report in a short space of time.
In addition, the earnings reports themselves can be lengthy and hard to digest.
Platforms such as that provided by Moomoo (Australia) Ltd, aim to overcome these issues.
The business recently updated its platform to include an earnings calendar that enables users to follow all Australian, United States and Hong Kong earnings reports on a single application.
“The calendar provides consolidated earnings information accessible via a friendly user interface and enables investors to add important earnings dates to their calendars,” explained Wilson.
“They can also book analyst and conference calls as required.
“In addition, they can filter by markets, whether an update is released before or after-market, and stock types, including stocks on their watchlists or their portfolios.”
AI enabling investors to make smarter decisions
Investors should also consider the platform operator’s preparedness to invest in new technologies to better inform and enable investors. For example, moomoo uses AI to personalise investment recommendations in a number of ways, including:
- AI Chart Pattern Analysis: A proprietary algorithm that interrogates stocks with similar historical candlestick chart patterns and simulates the likely price trend range for a short period into the future, helping investors make smarter decisions
- Market Monitor: An alert service that notifies users of important market events and changes that may impact their investments, allowing them to remain informed and react quickly to market changes
- Curated news and research to filter market noise and provide targeted price sensitive information
While online trading continues to grow, Wilson urges investors to take a prudent, disciplined approach to the opportunities it presents.
“Overall, while there are risks associated with online share trading in Australia, the benefits of increased accessibility and convenience have made it an increasingly popular way for investors to participate in the stock market,” concluded Wilson.
“Investors should always do their due diligence and seek professional advice before making any investment decisions.”
See a full list of moomoo’s platform features here.
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