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Finances & Money

Take a Look at Trading Online

November 20, 2020
By Susan Paige
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Trading stocks used to mean finding a stockbroker and getting them to execute the trades you wanted to make. The internet has changed the way in which many people trade stocks. Learn about online trading, including some fundamental tips for getting the most from it, how to get started, and choosing a trading platform. 

What is Online Trading?

Online trading means using the internet to trade stocks. More specifically, investors can create accounts with an online trading platform and execute their desired trades using just a device with an internet connection. With online trading, there is no need to call a broker if you want to take up a position in a stock. 

How Do You Get Started Online Trading?

The best way to get started online trading is to first learn some trading fundamentals. Jumping straight in without any education is a quickfire route to losing money. Books and courses can provide a solid background in trading terminology and basic trading strategies. Aspiring investors should also look out for simulated trading platforms, which allow beginners to get practical experience without risking any money. 

Advantages and Disadvantages of Online Trading

Advantages of online trading include:

  • The fees involved in trading online are typically lower than trading with a brick-and-mortar stockbroker. 
  • You can initiate trades immediately online versus having to call or make an appointment with a stockbroker. 
  • You can easily monitor your investments and their performance in real time. 
  • You have total control over the positions you want to take. 

Some disadvantages of online trading are:

  • You don’t get financial advice — platforms are execution-only services. 
  • The speed at which you can make trades means it’s easy to get carried away and lose more than you’re willing to.
  • If your internet connection is unreliable, your trades can fail to execute. 

Choosing a Trading Platform

Image via Pixabay by FirmBee

There are many different trading websites to choose from. When evaluating potential trading platforms to open an account with, it’s always a good idea to browse through some reviews from real customers on third-party independent review sites. You want to be sure that the online trading platform you choose is regulated and won’t scam you. 

You also want to make sure it functions properly and is easy to use. For platforms that offer free accounts, this means simply signing up and accessing the available tools. 

Another key concern is the fee structure at the online broker. Some brokers charge a fee for opening an account. Many brokers charge regular fees for account maintenance while requiring you to maintain a minimum balance. There are also commissions to be paid on each trade, and the commissions may differ across different brokers. Do some research to make sure you select a trading platform that works best for your situation.

Now that you know what online trading is, its advantages, and how to get started, the next step is to choose an amount you’re comfortable investing and open an account. Online trading can be an exciting and rewarding journey. Always bear in mind that you should only invest an amount of money that you’re willing to lose. 

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