By definition, online trading refers to the trading and investing of financial securities through an online trading platform or portal. It involves all the trading-related activities such as buying, selling, holding, etc. and includes various tradeable instruments such as stocks, bonds, ETFs, indices, options, currencies, etc.
With the advancement of trading instruments, a growing number of financial institutes and brokerage firms are now offering the chance for online trading. It means that you can now trade or invest in securities through the internet, without being physically present or assigning someone to be present on your behalf.
But is it something suitable for you? Below, we discuss the benefits of online trading so that you can make the decision of whether to trade online or not yourself.
Trade Like a Local in the Global Markets
By following the traditional methods of trading, one can only trade in a specific stock or currency exchange due to its need to be physically present. So, the only way for individual traders to access the full potential of trading was to rely on financial advisors or investment fund managers.
Thanks to online trading, the entire world of the financial market is now at the palm of your hands or on your computer screens. You can now be based in Europe, and still, buy, sell and hold securities from the American or Asian markets. With features like real-time quotes, pre-set orders, stop losses, etc. you can also enjoy unmatched trading flexibility of opening or closing a trade exactly when you want.
Minimum Requirements for Trading
Another massive benefit of online trading is the huge reduction of paperwork, and consequently, the processing time. With some brokers, you can now open an investment account in a couple of minutes without needing to visit anywhere. Just fulfill the minimum requirements – personal information, proof of address, proof of identity, etc.; and you would be ready to go in no time. Additionally, some brokers may also need you to make an initial deposit using a valid bank account.
Online brokers are also usually very fast and reliable in processing each of your trading orders, requiring little to no efforts from your parts.
More Control for Lesser Fees.
With an easy-to-use, internet-accessible online trading platform you can be completely in control of your money, and the trading account for relatively lesser costs. The best platforms not only come with a plethora of features like notifications, order processing tools, graphic charts, technical and fundamental analysis, etc. but also charges little to no fees for all their services. Some brokers take it even further and offer their users to trade totally commission-free.
Considering all these benefits, it looks more likely for online trading to become mainstream in the not so distant future. However, you should also consider the risks before starting to trade yourself.