An introduction to online trading
Online trading is no longer a luxury reserved for experienced brokers and high powered traders. In recent years the number of investors trading online has skyrocketed as direct access trading platforms and reduced commissions revolutionize the trading world and make online trading accessible to ordinary individuals.
There are two major ways to trade online, the first is through an online broker and the second is through the use of specialized online trading software. Trading through a broker entails opening an account with an online stock broker who will execute trades on your behalf. This option carries with it far less risk than direct access trading but also means that you have less control over your money. Other possible disadvantages to using a web based broker include high commission fees and delayed deals.
By contrast, using a direct access trading platform gives you direct access to the various stock exchanges around the globe. Direct access trading software can be purchased from major trading companies and software providers for between $300 and $3000 depending on what you are looking for. The software gives you the ability to cut out the middle man, by trade yourself and speed up deals.
Unlike trading through a broker, direct access trading has no safety nets. Therefore it is essential to thoroughly research market trends and share performance before even contemplating making a deal. Major trading and financial websites like the Financial Times and Marketeye offer up-to-date free market information, so you have all you need to research prospects carefully. Jumping straight into a trade before doing the necessary background research will see you losing your hard-earned money before you can even click your mouse.
If you are asking yourself why anyone would want to trade online, consider for a moment the advantages that online trading has over conventional trading. For starters, online trading is cheaper and easier than trading through a bank or broker. Commissions charged by e-trading companies are far lower than those charged by conventional banks and brokers. In addition, once you have purchased the necessary trading software and opened a trading account you will be able to trade anywhere, anytime, day or night. Provided that you have access to the Internet, making a deal is as simple as clicking your mouse.
Trading online also gives you more control over your hard-earned money. You can log onto your account at any time from anywhere in the world and check on available funds, profits and losses. You can get up-to-date share prices and monitor the markets yourself as opposed to having to rely on the information relayed to you by a broker or banker. What's more, online trading sites no longer just advertise cheap share deals. The development of the e-trading market in recent years has seen the emergence of sophisticated trading sites. These sites offer advanced tools such as up-to-the minute advice and portfolio management. Most sites also offer real time data on share prices and market behavior which means that any information you use to make trading decisions is constantly updated. If a key movement takes place you can act instantly as opposed to having to contact a broker to make a deal for you through a third party.
There are currently over a million online traders worldwide, with trading sites targeting new markets every day. Provided you take the necessary security precautions such as being aware of Internet firewalls and encryption procedures and guarding against electronic meltdowns, there is no reason not to try your luck at online trading. There's plenty of money to be made and what's more it's far more exciting and challenging than letting someone else trade for you. To quote billionaire Jack Simplot, "sometimes when the time is right, you just got to do it!"