Decades ago, you couldn’t buy or sell a financial commodity without going downtown to visit your broker at a brokerage firm. Thanks to the development of trading platforms, everyone can perform those same transactions from their mobile phone or computers.
In this article, we’ll explain what online trading is and the advantages to expect from trading on online trading platforms.
Online trading refers to buying and selling commodities or financial derivatives such as stocks, futures, or options via a trading platform. There are several forms of online trading. They include stock, forex, options, binary options, and cryptocurrency trading.
Your trading platform of choice is an additional determinant of how your experience with online trading proceeds. You’ll need to find a platform that offers great customer support, add-on services, multiple trading modes, and a wide range of product offerings.
Interestingly, you don’t have to be a pro trader or a finance guru before you can start trading online with a trading platform. Novices can have considerable success at their level with basic knowledge regarding buying and selling, especially with trading on contract for difference.
1. Trading at your convenience
The first reason any service goes online is for convenience, from mobile banking apps to food delivery services or gaming apps, and now, online trading with trading platforms. The season of getting on the road before trading on the market is over.
Online trading, firstly, makes trading and getting your finances up easier than if there wasn’t a trading platform to use. It saves you stress by allowing you to simply take out your phone or computer and start trading or monitoring your trade.
But the danger that comes with this convenient technology is that some people run the risk of getting distracted from doing other activities. Because it concerns their money or other people’s money in the case of group trading, they could spend too much time monitoring the market or trading platform to ensure they don’t make losses.
2. Less transactional costs
If you were trading with brick-and-mortar brokerage houses or investors, you’d be paying high trading fees, transaction fees, withdrawal fees, and all sorts of broker fees. Online trading platforms brought about a significant reduction in trading costs.
Some trading platforms charge $0 on some transactions, while others charge almost nothing on some big trades. If you were to execute those trades via a broker, you would pay much higher fees.
Despite the low fees, traders must remain careful about making transactions and trades. Every dollar still matters no matter how small and these small trading platform fees, here and there, add up to huge sums after a while.
3. Full control, no middle man
Despite how communal humans get, most people would still prefer to handle and monitor their investments themselves. With the advent of online trading platforms came the removal of intermediaries, the brokers. What’s left after that removal is the trading platform, the firm behind it, and lines of code.
Online trading gives you the absolute power to manage your trading investments yourself via the trading platform without having to call someone else. If you notice a trade could go sideways and need to make a decision, it’s left in your hand to pull the plug, not the broker.
Also, when you get familiar with the intricacies of online trading platforms, the trading community, and the market, online trading can be an interesting adventure.
While this can be good, new traders need time to extensively study the market strategies and trading platform before they can become profitable long-term. On the other hand, brokers would have spent years learning the trade before touching your money.
4. AI trading
Not many people are aware, but the technology behind online trading has taken the middle man removal farther than simply removing the broker. Recently, some trading platforms have even begun to replace the traders by using artificial intelligence and machine learning to automate trading activities.
The trading platform AI analyzes the millions of trading transactions executed every second and adjusts your trading positions based on that information to maximize profit. In a way, the AI trader is a broker of sorts.
Can it fail sometimes? Yes, it’s a man-made technology and is fallible. But it also might do a better job of earning you profits than if you’re new and working two other jobs while monitoring the market on a trading platform.
5. Trading automation and custom notifications
When a broker sees the price of a product falling, they don’t call you to inform you. Do you know what entity can do that for you? Your trading platform.
With trading platform tools, traders can set custom notifications for when the price of a product meets their target price. Depending on the specific setting of the notification, you’ll receive a notice every time the price touches your set price point for whatever reason.
Suppose you’ve been watching that product for hours or days to decide on a buy or sell decision. If the price movements match your goal, you’ll be able to know if it’s time to buy in or discard the product altogether and try another on the trading platform.
Online trading is buying and selling financial products on an online trading platform. People who engage in online trading can directly manage their trading portfolio with convenience and do not have to depend on a third-party broker.
If you want to expand your investment portfolio or source of income, you should try online trading on a trading platform soon.