There are many reasons to start trading online today and I’d like to address three of them. Trading online has been around for a number of years now. Prior to online trading, people would have to phone their broker for each individual trade. This, for the active trader was a time consuming process and probably kept most people out of active trading. With the creation of the web, access to trading grew exponentially.
The reasons you want to start trading online today
Lower Cost – Online trading is less costly than speaking with a broker. Less people involved in any transaction is going to bring down the cost. Typically if you trade by speaking with a broker you are going to pay on average between $20 and up to $50 for the trade. The range of price depends on the broker, number of shares, and type of order. Online trades can be as low as zero (usually with a minimum balance or minimum paid trades) to about $10 for larger orders.
Faster Executions – Speaking to a broker is fine and from my experience they will get your order in fast but not as fast as you can do it yourself. Think of it like this. When you’re speaking to a broker what do you think they are doing? That’s right, they are looking at a screen that is probably a lot like yours and inputting the same order you would have input yourself.
Access to after hours trading – What happens to the broker at the end of the day? Many of them go home and while there may be a night shift why take the risk. Having online access means you can get in and out of positions round the clock. So if news comes out you will be able to shift your positions around right then. One caution here though is be sure the online broker offers after trading and don’t just assume it’s there.
Brokers Like Online Traders
Another reason that commissions are lower for trading online is there is less risk to the broker. You see if you all a broker and input an order verbally there is that chance that he is going to make a mistake. If that happens and the market moves they have to pay for any losses you may suffer but cannot keep any gains. This is the biggest thing brokers fear because one mistake can wipe out an entire years worth of commissions. Online trading reduces this risk substantially.
It’s a no brainer
So as you can see moving to start trading online today make a lot of sense. It’s a win for you as the trader with lower costs, quicker executions, and after hour’s access. So get out those web browsers and start looking into how you can start trading online today.