An act of buying and selling financial products through online trading platforms, online trading revolves around stocks, bonds, options, futures, and even currencies. These platforms are typically offered by internet-based brokers and are available to every individual who wishes to earn money from the market.
According to Statista, nearly 14 million households in the United States have signed up with an online trading service. And with online trading rising in popularity, this number is only projected to increase.
With online trading, traders should make all their decisions themselves, which is quite different from using a stockbroker. With a stockbroker, you will generally receive input and advice. Hence, there is always risk associated with online trading.
Nevertheless, you can always learn more about your investment options, place orders to buy and sell, and bag a significant amount of money without speaking to a broker and leaving the comfort of your home. This is actually great!
If you are looking to get your toes wet in the world of online trading, here is a list of advantages to get you going.
1. Lower Fees
One of the best advantages of online trading is the reduced transaction costs and fees compared to the traditional brick-and-mortar brokerage firms. Generally, you will only pay somewhere between $5 and $10 to buy and sell stocks and exchange-traded funds at online discount brokerages. Even better, if you trade in a large volume of stocks, you can negotiate your broker’s fees.
2. Greater Control and Flexibility
Time is of the essence when you trade stocks. So, the speed that comes with online trading portals happens to be beneficial to many investors. Moreover, with online trading, you can trade whenever you wish to, unlike traditional trading, where you might be stuck until you reach your broker and then place an order.
Traditional brick-and-mortar brokers might require an appointment to initiate a trade. Nevertheless, online trading enables instantaneous transactions, meaning you can execute a trade almost immediately. You can review all your options without depending on a broker to advise them on the best bets for their money. Furthermore, you also get to monitor your investments and make decisions on buying or selling stock without any outside interference, which gives you greater control over your investment.
3. Better Understanding of Your Money
Now, this is an advantage that happens as a result of online trading. And believe us, this is something you wouldn’t want to pass upon. Much like the best betting sites that offer insights into each game, allowing you to draw conclusions on what happens in the future, with online trading, you can predict the market behavior and project the rise or fall in the stock price. In addition, as you will be literally handling your finances, you are responsible for them.
Over time, this makes you more experienced in understanding the market and great investment opportunities from the bad ones. This knowledge about money happens to be quite beneficial. What’s more, having this on your resume helps you become more marketable to companies looking to fill a well-paying position in the finance department. So, when you are looking to mint a quick buck, you can become financially smarter in both your professional and personal life.
4. No Brokerage Bias
When you trade online, you take matters into your own hands, thereby eliminating brokerage bias. Brokerage bias often happens when your broker gives you financial advice that benefits them more than you. For instance, they might give you biased opinions in the form of a commission for selling specific mutual funds and other products. Online trading eliminates this by making you the ultimate decision-maker of your trades.
5. Access to Online Tools
In the world of online trading, a lower cost doesn’t always mean a sloppy product. Today, many trading companies offer their customers an impressive suite of tools that help tap into valuable information and thereby optimize trades.
Know That It’s Risky
Though profitable, online trading is risky, and the truth is that you won’t always be able to make the right decisions. You might even miss the trade a few times, or problems may arise and affect all traders. However, all you got to do during these times is understand the market and avoid depositing too much capital.
Furthermore, the industry is quite competitive. In order to succeed, you should possess a good understanding of the market. If you are just starting out, it is ideal you work alongside a reputable broker to learn the job.
