Online Trading Companies – How to Choose Wisely

Online trading companies have made it easy for individuals from all over the world to buy, sell and trade stocks and to gain a profit in shares. There are a number of things to be kept in mind before deciding on a trading company. These include, but are not limited to:

– tools provided to you to aid in your trading endeavors

– fees and commissions charged by the company

– quality of customer service and

– the security of the company’s website

Tools Provided

Potential customers of online trading companies should consider the resources provided to them to facilitate their trades. Online companies should offer investors tools to help facilitate effortless trading. These tools include stock alerts, quotes, trading charts and graphs and search reports. Making these tools available to an investor instantly increases the investors abilities to trade with ease.

Fees and Commissions

One of the most important factors to consider when browsing online trading companies is the fees and commissions that the company charges their customers. Depending on the amount of fees and commissions charged by companies, an investor’s ability to make a profit could be compromised.

Security

Security is of the utmost concern when dealing with online trading companies. With every stock bought, sold or traded, money is being exchanged. If the company does not have sufficient security in place, it could truly jeopardize not only the identity of the investor, but any and all trades that the investor makes on the company’s website.

The company that you choose to go with for online trading should have multiple levels of security in place, which includes secret questions, code recognition and secure passwords. With these methods in place, investors can rest assured that their information will remain safe from hackers and other individuals with malicious motives.

Customer Service

As with any business, customer service is extremely important when considering an online trading company. Especially when dealing with finances, the trading company you choose to use should have customer service agents that are readily available- whether on the telephone, through email or through the company’s website itself via a chat option. These agents should be knowledgeable on the company’s systems and the products offered in order to properly assist you, the investor, with your needs. Of course, customer service should always be free and have reasonable hours of availability. One great resource for determining the reliability of a company’s customer service is to do your research online. Reading customer reviews is a great way to way to determine if the customer service of the company is up to your standards.

Other factors to consider include mobility. Many online trading companies are now offering customers the option to continue to monitor their stocks- even when they are on the go! If this is important to you, researching whether or not the trading company you are considering offers a mobile application for your mobile device is a good idea.

Choosing an online trading company is not something that should be done lightly. Taking the time to do your research on all of the companies you may be considering allows you to make an informed decision on the right company to suit your investment needs.

Online Trading Advantages and Disadvantages

Online trading, or direct access trading (DAT), of financial instruments has became very popular in the last five years or so. Now almost all financial instruments are available to trade online including stocks, bonds, futures, options, ETFs, forex currencies and mutual funds. Online trading differs in many things from traditional trading practices and different strategies are needed for profiting from the market.

In traditional trading, trades are executed through a broker via phone or via any other communicating method. The broker assist the trader in the whole trading process; and collect and use information for making better trading decisions. In return of this service they charge commissions on traders, which is often very high. The whole process is usually very slow, taking hours to execute a single trade. Long-term investors who do lesser number of trades are the main beneficiaries.

In online trading, trades are executed through an online trading platform (trading software) provided by the online broker. The broker, through their platform offers the trader access to market data, news, charts and alerts. Day traders who want real-time market data are provided level 1.5, level 2 or level 3 market access. All trading decisions are made by the trader himself with regard to the market information he has. Often traders can trade more than one product, one market and/or one ECN with his single account and software. All trades are executed in (near) real-time. In return of their services online brokers charge trading commissions (which is often very low – discount commission schedules) and software usage fees.

Advantages of online trading include, fully automated trading process which is broker independent, informed decision making and access to advanced trading tools, traders have direct control over their trading portfolio, ability to trade multiple markets and/or products, real-time market data, faster trade execution which is crucial in day trading and swing trading, discount commission rates, choice of routing orders to different market makers or specialists, low capital requirements, high leverage offered by brokers for trading on margin, easy to open account and easy to manage account, and no geographical limits. Online trading favors active traders, who want to make quick and frequent trades, who demand lesser commission rates and who trade in bulk on leverage. But online trading is not here for all traders.

The disadvantages of online trading include, need to fulfill specific activity and account minimums as demanded by the broker, greater risk if trades are done extensively on margin, monthly software usage fees, chances of trading loss because of mechanical/platform failures and need of active speedy internet connection. Online traders are fully responsible for their trading decisions and there will be often no one to help them in this process. The fees involved in trading vary considerably with broker, market, ECN and type of trading account and software. Some online brokers may also charge inactivity fees on traders.

What Is Online Trading and Its Advantages?

What is online trading? It is the process of buying and selling currencies or financial securities through an internet-based brokerage’s trading platform.

Online trading has made possible for the thousands of consumers with internet access to participate in what was once considered the realm of the moneyed and the powerful. With online trading, as long as you have, learnt the currency trading basics, have a reasonable amount of money required to open a trading account and invest in the market you can participate.

In an effort of learning what is online trading, here are some of the reasons why so many are not opting to take their trading online:

1. The biggest advantage that online trading has to offer over other types of trading is that online brokers charge lower commissions. In addition, the larger the amount of money that you trade then the lower the commission charged. Sometimes, depending on the amount of money you are trading, the commission can go as low as 0.01 of this amount. Therefore, you are able to save more money that you could choose to re-invest in the market.

2. Another benefit is that online brokers have no input whatsoever on your trading decision, they buy and sell as per your instructions. In the real world, you do not have such a guarantee. Some brokers have been known to refuse to accept certain trading decisions, which they believe to be flawed.

3. Another advantage is that investors also have at their disposal multiple software programs that they can use to learn some of the currency trading basics, evaluate stock charts, examine real-time stock prices and so on. This will go along way in ensuring that the decision you make will be more likely to result in positive returns.

4. It is well-known that in the world of trading stocks and currencies even the smallest amount of time can impact on the trading profits that you make. Therefore, with online trading, as soon as you see an opportunity, you can take advantage of it almost instantly. However, in the real world, you will probably waste precious time calling your broker, who will then have to call the trader, the trader will give him/her the price, your broker will then call you back with this price and then you make the decision to buy or not to buy.

5. This kind is also notorious for proving to investors the ability to trade in as small or large amounts of money that they want. There is really no limit to what you can trade. However, outside of the internet, most brokerages will have a minimum required trading amount, that is not debatable.