Online Trading: The Advantages and Disadvantages
Being fundamentally different from traditional trading, online trading has its own sets of advantages and disadvantages.
Just like everything else, the way people invest and trade on different assets, bonds, and securities has also changed quite significantly thanks to the unstoppable rise of the internet. No longer an investor has to hire a financial manager or be physically present at the stock exchange to buy and sell stocks or currencies. That’s the whole point of trading online anyway.
You see, if you trade securities through an online platform, you are performing an online trading activity. It is as simple as it sounds too. All you would have to do to trade online is to open a trading account with a reliable broker that offers this service.
However, as any form of trading on securities and currencies is a ‘high risk for high returns’ activity, let’s find out to pros and cons of doing it online from below.
The Advantages of Trading Online
There are quite a few different reasons why more and more investors are flocking towards investing through online platforms. Among these reasons, the ones that stand out the most are:
Lower fees: thanks in part to lower maintenance costs and massive competitions, online brokers can charge little to no fees to trade on their platform. As it allows you to trade on your own, you can also save from not having to pay an advisor or investment manager.
Anytime, anywhere: with the global forex markets remaining open 24/7, and different stock markets operating in different time zones; you can trade anytime you want. You can also do it from anywhere as long as you have an internet connection.
Real-time updates: while real-time price updates are pretty fundamental for an online platform, many online brokers also have the features to keep their traders updated about the major news and events to help them make informed decisions.
Total Control: by investing or trading your money, it’s you who is in control of how your money should work for you. With features like stop loss, take profit, leverage, advanced order placements, etc.; you can also balance your time as per your needs. You can also keep your portfolio under constant watch at the comfort of your home if you choose to do so.
The Disadvantages of Trading Online
Accessibility and comfortability are often a two-way sword, and conducting your trading activities online is the same. As it’s so easily accessible, it can also easily get addictive. Whereas, the effortless nature of opening or closing a position can easily lead to making more and more careless and risky decisions. In the online trading world, an error translates into a hefty loss most of the time.
As it’s conducted online through the internet, any latency in the platform or in speed can also get you stuck in an unexpected position. However, most of these disadvantages are self-inflicted, they can be avoided with some discipline from the trader.