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How to Keep Your Financial Information Safe on Retail Trading Apps

February 5, 2021

In the past few weeks, nothing has received more buzz than the words GameStop and AMC. Just a month ago, these three investment options weren’t even considered legitimate options among serious and amateur traders alike — If you would’ve told someone they could potentially make hundreds, if not thousands, on the trio, they would’ve looked at you like the most irresponsible person in the game. But now, in the wake of the sudden and remarkable organization of retail traders on Reddit against Wall Street hedge funds, GameStop and AMC are some of the hottest commodities around. 

Of course, as with any major online movement, investing in these options comes with risk. Not just financial risk, either — Because most of the trading is being done on retail trading apps like Robinhood, Webull, Coinbase, and Cash App, there’s always the risk of running into security breaches. Thankfully, there are ways to avoid a breach in security. You just have to know how to safely use retail trading apps.

How Do Retail Trading Apps Work?

Before we get into how to keep yourself safe on retail trading apps, it’s important to discuss how exactly these apps work.

While they’ve boomed in the past few weeks, the truth is that apps like Robinhood have been around for nearly a decade now. Offering users the unique ability to trade stocks, ETFs, and cryptocurrency at little to no cost whatsoever, these retail trading apps effectively bridge the divide between Wall Street and Main Street, allowing everyday people who have never invested a dime throw their hats into the ring with investors who have made a living off of the stock market. 

In order to do this, retail trading apps have to go to great lengths to protect themselves against massive losses. With no minimum amount required to trade and no fees to buy or sell, there’s a lot of money coming and going through these apps. For this reason, the Securities and Exchange Commission (SEC) has to provide some financial safety measures. This gives users of retail trading apps like Robinhood have protection up to $500,000 for securities and up to $250,000 for cash claims.


On the other end, the people running retail trading apps also need to protect themselves in order to ensure they get paid, too. Some offer fees for premium versions of the app, but the real moneymaker for retail trading app employees is interest. Just as a bank collects interest on deposits, these apps make money off of customer cash and stocks. Another big pull comes from high-frequency trading and payment for order flow, allowing retail trading apps to profit off of processing trades in the back end through the actual investments themselves. 

How Can You Keep Your Information Safe on Retail Trading Apps?

If you’re making big money on retail trading apps with stocks like GameStop or AMC, you need to make sure you’re taking the steps to protect that money. Simply logging out of the app each time you finish your activity isn’t enough — there’s a lot more to it than just that. 

Never Disclose Your Username or Password to Anyone

For starters, the obvious needs to be stated: Don’t ever share your retail trading app login information with anyone. This isn’t like your social media account or your email password — retail trading apps have your bank account info and your assets on full display upon login. If someone were to breach this security and make it into your account, they’d have access to all of that and could hypothetically do whatever they wanted with it. For this reason, keep your login to yourself. 

Don’t Reuse Passwords from Other Accounts or Sites

Retail trading apps are not as casual or carefree as they might seem to you. After all, your finances are at stake here. You can’t just recycle your usual login and risk someone cracking your password. It’s best to have a unique and hard-to-crack password for each retail trading app you use, and it’s even better to store these passwords somewhere impenetrable like a safe or a lockbox so that no one can get to them. It might sound like a lot of effort, but it’s worth it to keep your investments and your finances protected.

Be Careful Not to Risk It All, No Matter How Tempting

Last but not least, it’s necessary to keep a level head and always keep the big picture in perspective — especially with trendy investment options like GameStop and AMC where record highs and abysmal lows can come one after the other. Set aside how tempting it might seem to go all in on an investment that’s trending upward and stay focused on what’s at stake: If the value were to drop in an instant, would you be okay? It’s one thing to have someone else sabotage your finances through a security breach, but it’s something else entirely for it to happen at your own hands. 

The Bottom Line: Use Extreme Caution with Retail Trading Apps

Once the heat of the moment passes and the stock market returns to whatever “normal” looks like in the world of investing, it’ll be easier to gain a better perspective on all that’s gone on with GameStop and AMC in recent weeks. Until then, it’s essential for you to follow these steps and keep your financial information as safe as possible.