Trading Online Puts You in Control
You make the decisions with online share trading
The modern way of investing in the stock market is trading online, also referred to as online share trading. Traditionally, before the advent of the computer and online transactions, it was necessary to go through a bricks-and-mortar stock brokerage in order to invest in the stock market. You opened an account and made your trades through the brokerage.
Traditional stock trading through a brokerage was characterized by high minimum limits on investments and high brokerage fees on transactions. This system limited stock trading to a relatively select market of people with significant amounts to invest. On the other hand, it placed trading in the hands of persons who were supposed to be experts at the job. Stock brokerages controlled information on the market, analyzed trends and were the first ones to receive information about corporate developments.
When the computer and the internet made online stock trading possible, an alternative system was put in place. To invest in shares of stock online, you must open an account with an online stock brokerage and comply with its requirements. Aside from providing basic information about yourself, your account needs to maintain a fund balance either in cash or shares. These requirements are meant to comply with government regulations and the funds in your account are necessary so you can buy shares online. The shares you can buy online are the same ones listed in the stock exchange.
An online brokerage gives you information about the ongoing value of shares in the stock market. You pick out the shares you want to buy and the online brokerage buys them for you against your account. If you own shares and want to sell them, you can instruct your online brokerage to do so on your behalf. For these transactions, the online brokerage charges you a fee or commission which is specified when you open your account.
The changes brought about by online stock trading offered several advantages. First of all, minimum investment amounts were lowered together with commissions on trades, opening up investing in shares to a larger market. The most important advantage, however, was that it transferred the power to decide on which stocks to buy or sell from the broker to the individual investor – you. Because an online brokerage also gives its clients information about markets, trends and other pertinent news, you no longer had to rely on the know-how or instinct of the stock broker to make the decision.
Still another advantage is the speed with which online stock trading can be conducted. In the traditional method of stock trading, you still had to communicate with your stock broker, make your inquiries and communicate your decision. In the online stock trading method, buying or selling stocks is a matter of a few mouse clicks.
Online transactions are regulated by the government agencies that also oversee traditional stock brokerages. This provides the assurance that online share trading gives you enough protection and safety to do trading online at the same risk level as the traditional way.
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