Before the widespread use of the Internet, trading in the stock market was typically broker oriented. The broker would give advice, trade the stock and eventually pocket a hefty commission once the deal was closed. Moreover, to trade, one had to present physically at the exchange or rely on numerous phone calls to the broker house. But, with the advent of Internet in everybody’s life, the way of stock trading has also radically changed like all other things in today’s world.
Online trading is done through secured websites and proprietary software applications provided by reputed brokerage houses or financial institutions. The trader is required to open an account and deposit a security amount (in some cases, the transaction is done through the trader’s bank account in real-time) to start trading. The trader is also assisted with elaborate online help systems, training documents and professionals through call-centers.
The primary advantages of online trading are:
In traditional stock trading, the commission charged varies from broker to broker, Contrary to this, in online trading, commissions are far less and almost uniform for all stocks. So, low-priced stocks can be traded over a shorter time with considerable profits. trading sites to invest online Low commission charges also enable the trader to make a profit out of marginal rise or fall of a stock within a day.
Unlike the traditional stock trading (the trader calls the broker, fixes the price and finally makes the payment) where the complete deal may take hours, an online trader can entire the whole process in minutes. Considering the time-factor involved in fluctuating the price of a stock, the trader can choose the precise time of selling or buying and thereby maintain the profit margin.
Transparency in the system
Online trading is largely transparent where the trader can access any information about a stock at every stage of a transaction. Thus, with the availability of trading history, price-history, best-quotes and the overall performance, the trader can form a strategy while dealing the stock. Also, a thorough scrutiny of the transaction process by high-end software applications enables the trader with a safer and securer option to trade.
A 24×7 marketplace
Online trading is a 24×7 and 365 days in a year affair! The trader can log on to his account from anywhere in the world and start trading (of course, within the trading hours of the stock exchange). The system can also be instructed or set to buy or sell a stock at a precise time during the trading hours. For example, for a certain stock, the trader can set instructions in his/her account to buy if the price reaches a certain value. The facility enables the trader to not to miss a profitable deal even when he/she is absent from the trading scene. Also, a trader always has the option to trade in multiple markets with real-time market data.
The biggest benefit of online trading is perhaps in the minimum investment required to start the business. The trader invests a minimum amount and while trading, the broker (whose online service is being used) may lend up to a certain amount to close a deal which can be conveniently returned later.