Online trading or direct access trading (DAT), financial instruments became popular over the past five years. Now almost all financial instruments are available to trade online including stocks, bonds, futures, options, ETFs, mutual funds and forex currencies. Online trading is different from much of the traditional trade patterns and the different strategies need to profit from the market.
In traditional commerce, trades made through a broker over the telephone or any other communication method. The broker helps the dealer collects the entire trading process and use information to better trading decisions. Exchange for this service commissions charged by retailers, which is often very high. The whole process is usually very slow, taking hours to execute a single trade. The long-term investors who have a smaller number of trades are the main beneficiaries.
The online trading, online trading conducted through the trading platform (trading software) provided by the online broker. A broker trading platform for access through the market data, news, charts and alerts. Day traders who want real-time market data are available at 1.5, 2 or third-level level of market access. All trading decisions a trader himself, given his information to the market. Often the traders to trade more than a product, market and / or an ECN in his single account and software. All trades are finally (almost) real time. In return for services online brokers charge trading commissions (which is often very low - discount commission schedules) and the software user charges.
One of the advantages of online trading, automated trading process, which is independent broker, informed decision-making and advanced trading tools, traders under the direct control of the trading portfolio, are able to trade multiple markets and / or products, real-time market data, faster implementation of trade which Key trading day and swing trading, discount commissions, the choice of routing orders to various market makers and specialists, low capital requirements, high leverage, brokers offered by commercial margin, easy to open an account and easy to use invoices and no geographical boundaries. Online trading favors active traders who want to make a fast and frequent professions who require a smaller commission, and a commercial bulk leverage. But online retailers are not trading.
The disadvantages include e-commerce, must meet certain activities and account minimums than the broker is required, at greater risk if the trades are widely performed margins, monthly software usage fee, a trading opportunity lost due to mechanical / platform failures and need a fast Internet connection is active. Online merchants are fully responsible for their own trading decisions, and there will be no one who often helps them in this process. The charges, which vary considerably with the trade, broker, market, and type of ECN trading account and software. Some online brokers may also charge inactivity fees for merchants.
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