Online trading as the names suggests is trading of stocks through the internet. It has successfully gone onto bring the stock exchange facilities with the reach of people who require them. In fact, there are number of websites, which facilitate online trading. So, one cannot deny the fact that share market online has arrived in a new form and the advantages of it are numerous. With the introduction of it, people who were once upon a time scared to enter the share market are now slowly making their presence felt. They feel that with better education and financial calculation tools, they are well-equipped to deal with finance matters. Because of the upsurge in online trading, one can expand their investment portfolio to bonds, forex currencies along with mutual funds.
So, what is the basic difference between the traditional and the online trading platform? In the former, all your trading activities are undertaken by the stock brokers where they tend to spend a considerable amount of time and help you in the entire process. On the other side, in case of online trading, the stock brokers are known to have a special platform in specific websites, which enable them to trade in stocks. Extra information is provided in these platforms pertaining to alerts, news, charts along with market data. Various levels are associated with market data. In fact, every level of market data is required by the day traders who tend to make the decision themselves. What more, the traders have the liberty to trade in more than one product in case of online trading. In case of traditional trading, the brokers tend to demand a high rate of commission and in certain cases may ask for a percentage in the earnings, as well. This is in complete contrast to the online platform where there is a flat rate of commission levied on the transactions.
There are some major advantages, which are associated with online trading. It is pretty simple to manage as well as operate an account, and there are no geographical boundaries involved. They are known to favour active traders, who trade in bulk stocks and demand less amount of commission. You can trade in real time market data in various products along with markets. There is a fully automated process where the investors get access to advanced trading tools. This helps them to make spot on investment decisions. In addition to this, there is faster trade execution that tends to facilitate traders who are indulged in swing trading.
But there are some pitfalls associated with online trading, as well. The fees of the broker tend to vary considerably and there is a possibility of loss in mechanical or malfunctioning of the platforms.
In spite of the pitfalls, the advantages of online trading are numerous. One can make significant amount of planning if they take precautions and invest in a planned manner.
So, opt for the online route at the earliest!
The author is a reputed stock broker, who has been associated with various specific stock exchanges. Currently, he is associated with Trade Walla group.