The general meaning of Online Trading is trading of the stocks with the aid of internet. Online Trading has successfully brought the stock exchange facilities within the easy reach of the people requiring them. There are a number of trading sites today that facilitate Online Trading. With the introduction of Online Trading, the investors, mainly the new ones, who were not actively involved in the market, are now rushing towards it.
It is due to the upsurge of Online Trading that it’s feasible to trade in various securities like:
· Mutual funds
· Forex currencies
Differences Between Traditional Trading And Online Trading
While trading traditionally, all your activities are carried out with the aid of brokers where they help you in the entire process while spending a lot of time. Whereas in Online Trading, the stock brokers have a platform in the form of special websites created for trading of stocks. These platforms are instrumental in providing extra information in relation to:
· Market Data
There are various levels provided for the market data. Every level of market data is required by the day traders who make their decisions all by themselves. Traders have the liberty to trade in more that one product, ECN or one market with just one account and software. There are various advantages as well as disadvantages associated with the Online Trading which can be jotted down as follows:
· It is simple to open and manage an account and there are no geographical limitations.
· Online trading of stock facilitates trading in real-time market data and various markets and products.
· Online trading favors active traders, who trade in bulk but demand lesser commission.
· Faster trade execution that facilitates day traders in swing trading.
· Complete automated trading process with access to advanced trading tools
· There is probability of trading loss in case of mechanical or platforms malfunction
· Online trading is unsafe if it is done broadly on margin
· The fee of online brokers varies
Though there are certain disadvantages associated with online trading, yet if one proceeds with necessary precautions, it is a useful tool in operating your business.