Alex Metzger Alex Metzger 20.02.2023

As Trading Apps Surge in Popularity, Investors and Experts Raise Concerns About Safety and Security

Trading apps have become increasingly popular among retail investors looking to participate in the stock market, but concerns about the safety and security of these platforms are beginning to emerge.

Common security risks

One of the main concerns is the potential for data breaches and hacking attacks. With many trading apps storing sensitive personal and financial information, including bank account details and social security numbers, a breach could have serious consequences for users. Choosing a suitable UK share trading app can help with this risk, however it's important to be aware of common challenges. 

While trading apps have implemented security measures such as two-factor authentication and encryption to protect user data, experts warn that these measures may not be enough to prevent determined hackers. Some apps may be more vulnerable to attacks than others, depending on the quality of their security systems. 
As online trading applications have become more accessible and their reach has grown rapidly, there has been a corresponding increase in the number of individuals engaging in fraudulent activities. In 2020, the FBI reported receiving 791,790 complaints related to online phishing scams in the US, which resulted in the theft of over 4.2 billion USD from Americans.

In a survey conducted by Fidelity in 2021, 36% of investors said they had been targeted by a phishing attack, and 18% said they had fallen victim to one. However, in a survey conducted by J.D. Power in 2021, only 44% of investors felt their online trading platform was "completely trustworthy" in terms of cybersecurity. 

According to a report from the cybersecurity firm Zimperium, over 25% of the top 100 mobile trading apps have at least one high-level security vulnerability. 

Addressing the safety concerns

To address the concerns surrounding the safety and security of trading apps, some experts have suggested that more regulation may be necessary. This would involve establishing rules and requirements for trading apps similar to what is already in place for traditional brokerages, which are subject to a range of regulations aimed at protecting investors.

One area where regulation could be particularly effective is in the realm of security measures. Trading apps could be required to meet certain standards for data encryption, two-factor authentication, and other security features to better protect users' personal and financial information from hacking and other cyber attacks.

Regulations could also be put in place to ensure that trading apps are transparent about their fees and other charges, and that users are provided with clear and accurate information about the risks associated with trading. This would help prevent fraud and other deceptive practices that could harm investors.

Regulations could also require trading apps to establish customer support systems that are accessible and responsive to user inquiries and complaints. This would help ensure that users are able to receive the help they need in a timely manner, which could be particularly important in cases where technical issues or other problems arise.

The importance of safe trading apps

Safe trading apps have revolutionized the way that people invest in the stock market and other investment opportunities. They provide an accessible and convenient way for retail investors to manage their portfolios and make trades, without needing to go through traditional brokerage firms. This has made it easier for individuals with limited financial means to invest and grow their money.

In addition to increased access to the market, safe trading apps also offer a range of tools and features that make it easier for users to track their investments and make informed decisions. For example, many apps provide real-time data and news updates, as well as advanced charting and analysis tools to help users identify trends and opportunities.

However, it is important to note that not all trading apps are created equal. Some apps may lack the necessary security measures and consumer protections, putting users at risk of fraud, hacking, and other dangers. This is why it is crucial for users to take appropriate precautions when choosing a trading app, such as researching the company's track record, reading reviews from other users, and looking for security features like two-factor authentication and encryption.

By choosing a safe trading app, investors can gain greater access to the market while also protecting themselves from potential risks and hazards. With the right app, investors can confidently manage their portfolios, make trades, and achieve their financial goals with peace of mind.