With the proliferation of the internet, brokers have become a commodity that is only used by those who intend to trade large quantities of stock – usually either very wealthy individuals or businesses. Quite naturally, online trading has become extremely popular and an increasing number of smart investors are now taking advantage of its benefits. Although the process of online trading is simple and just about anyone can do it, there are both advantages and disadvantages you have to consider.
The advantages of online trading:
- You have the ability to manage your own stock portfolios
- You will have more control and flexibility over the types of transaction you choose to conduct
- Good research tools and newsfeeds on each stock, which you can delve deeper into in your own time
- The commission costs for trading are significantly less money than using the services of a professional broker
- You can get access to lower fee mutual fund investments
- Real-time values of your portfolio
The disadvantages of online trading:
- First time investors may get sucked into all the technology and may temporarily forget that they are actually using real money
- There is no mentoring relationship between a professional broker and an online trading account holder, leaving the investor out on his/her own to make choices
- If the mechanism or system fails due to the less speed of internet connection, the investor can suffer a big failure
- Novices not familiar with the ins and outs of the brokerage software can make costly mistakes
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