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Direct Access Trading

Direct Access Trading

Direct access trading (DAT) platforms are one of the means by which individuals can trade online. The other way to trade electronically is through an online broker using the Internet. Both methods have their pros and cons and it is up to individuals to decide which approach is best suited to their trading needs.

Online brokers or e-brokers as they are sometimes called have web sites where individuals can place stock requests. After registering with an online broker you fill out an order for the stocks that you wish to purchase. You then send this order to the online broker via the Internet. The broker receives your request, reviews it and purchases the stocks on your behalf.


The advantage to trading through an online broker firm is that the broker can use his expertise to determine whether the order you make is likely to be lucrative. On the down side, executing the transaction can take a significant amount of time. During this period, markets may fluctuate which often results in clients losing money. Day traders rarely use web-based brokers as minutes and even seconds can make a substantial difference to the outcome of a deal.

By contrast, Direct Access Trading (DAT) platforms allow for much faster execution of deals. DAT' platforms are sold by a number of leading trading firms, and consist of specialized trading software and high speed connections to various markets such as the NYSE and the NASDAQ as well as numerous Electronic Communications Networks.

DAT systems allow individuals themselves to trade with specialists on the floor of a particular exchange. To make a deal, you would simply specify the shares you want to buy and the price you are willing to pay for each share. You would then send this information directly to the specialist at the market of your choice. Provided that the shares you wanted were available, the transaction would be executed almost instantaneously and verification of your purchase would immediately be sent to your computer.

The advantage of direct access trading is that it cuts out the middle man and grants individual traders direct entrance to markets. The platforms also grant individuals access to NASDAQ quotes, enabling them to monitor share prices themselves and ensure that they buy and sell at the best possible moment.

Trading firms usually charge individual traders a small monthly fee for the use of their software. In addition, a commission fee is also deducted from every trade that is made. Commission rates usually vary depending on how many deals a trader makes over a specific period of time. Despite the additional costs, most individual online traders prefer to use a Direct Access Trading platform. This is due to the fact that DAT software substantially reduces the time that it takes to execute a trading request and gives traders more control over their own transactions.