If you have heard of online trading – or would like to begin this process – but do not know exactly what it is, what it involves, or how one goes about trading through the internet, then this article will brief you on the basics.
The first thing you should know, however, is that you need to find the right online trading platform to begin your new investment venture in the best way possible. Check out Wilkins Finance for a fantastic starting point, where you will encounter all manner of helpful and grounding tools to get you going!
Online trading – simply put – is the buying and selling of various assets done through a certain broker’s online proprietary trading platform. The usage of online trading has seen a vast peaking in popularity, ever since the personal computer became a far more common asset, and high speed internet became publicly available towards the end of the nineties.
You can now trade pretty much any market asset online: bonds, options, currencies, mutual funds, stocks, futures, and ETFs. Online trading is also known as self-directed investing, or e-trading.
Getting to Grips with Online Trading
How Things Worked Before Online Trading
In the past, traders and investors would rely solely on the calling of their particular brokerage firms in order to activate a trade for them. If, for example, you wanted to buy thirty shared in Coca-Cola, you would have to dial your broker and then tell him you have a buy order request.
Your broker would then inform you about the market price before confirming the purchase order. If you wanted to make a limit order, then your broker would then need to brief you on the relevant limit price, and the time period which the order would be kept open for, as well as which account you should purchase the shares for – if you happened to have a number of investment accounts.
Your representative for the investment would then also have to confirm whatever commission costs were involved with the processing of such a trade. After all of these steps had been properly run through, then your broker would finally place your trade in the system, which would be connected to exchanges and trading floors, such as the NASDAQ or the New York Stock Exchange.
You would then receive a trade confirmation through the mail, as well as a quarterly or monthly statement which you would receive regarding your account and how your investments were doing.
The Transition into Online Trading
With the beginning of the Information Age, and the influx of the digital realm, investors quickly began picking up on the worth of online trading platforms which were available for the enabling of DIY investments.
The platforms provided for online trading act as hubs for the plethora of tools that investors are provided with when trading online. Here you are able to review lists of securities that are currently being displayed on dashboards, place sell and buy orders, gain all of the relevant news needed regarding companies, and so much more.
Whenever you have something actioned in the market, you can, at any time check its status through whichever online platform you happen to be using. You can also review your confirmation statements, investment statements, as well as your investment tax forms.
Such accessibility really allows for the initiation of transfers between various accounts which would be held by the same financial group.
A Far More Affordable Means for Trading
With the introduction of online trading came a far more affordable set of rates for both discount brokers and investors alike. Brokers will encourage individuals to perform their investment actions themselves by providing lowered commision rates and trades for trades which will be activated online, as opposed to trades which are opened up through telephone through an agent.
You can expect to pay between five and ten dollars for an online trade – a trade which would cost around thirty dollars if it had been done through phoning in. These lowered rates have also provided a far more accessible level of potential interaction for the ordinary person, meaning that far more people are now able to trade successfully.