Online Trading

Written by Michael Federico
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People from all backgrounds have found success trading stocks, bonds, and futures online. In the past, online traders consisted of people who only made occasional small purchases. They were, by no means, trying to change their fortunes through the stock market. They merely wanted to see if they could pick up a little extra money. There are still countless Americans who practice this method of online trading. However, there are now trading sites on the Internet that have members who deal in large sums of money and take huge risks on the market.

Trading online has become so appealing that people who have worked directly with brokers for years have decided to cut out the middleman and start trading on their own. Even the largest brokerage firms have begun to take notice of this trend. In order to combat it, many firms have begun to offer online services that their clients can use in conjunction with their personal broker services.

Online Trading Costs

One of the most appealing things about online trading is the relatively low cost involved. When working with a brokerage firm, a person usually has to deal with extremely high commissions. This means that a substantial percentage of every trade goes to the broker. This is true even if the seller is actually losing money on the trade.

There are a number of online sites that charge by the trade and by the share. Each trade has a set fee, but if a person is buying or selling a lot of stock, he will be charged more. It is possible to find trading services on the Internet that charge only a $1 commission for a trade involving 100 shares of stock. Many of these sites offer deals to new members, taking a commission of only a few cents on the first 500 shares a person trades.

Risks of Online Trading

Playing the stock market can be incredibly risky. There are constant ups and downs, and even the most seasoned trading veterans can't predict exactly what is going to happen at any given time. Trading online comes with all of those inherent risks, but it has a set of unique risks, as well.

There are some sites that simply do not have up-to-date information. If there is a lag time on a site's quote service, a person should not trade on that site. It is crucial for a trader to have real-time quotes. Also, many people who get involved with online trading do not have a firm grasp on how the stock market works. Going into a trade blindly does not necessarily mean a person will lose money, but a person will relieve some of the risk if he takes the time to do some research before trading.

Customer Service for Online Trading

There are very few online brokers that offer live customer service. It is definitely possible to make trades without any assistance. However, finding a site that will put a trader in touch with an actual person can be a huge benefit. A customer service rep can help a person to better navigate the website and fully explore all of its options. If a person is having a technical problem or simply does not know how to execute a particular transaction, someone on the customer service line can help.

Some sites will also put traders directly in touch with brokers. There are some complex trades that really should not be made without the assistance of a professional. Also, a broker can help a person to better understand certain market trends or research.

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