Online stock trading is becoming very popular for several reasons, and convenience is one of the biggest.
It is simply the buying and selling of stocks using your Internet connection as opposed to phoning or visiting your stockbroker to order your transactions. Typically, here's how online trading works. You connect to a secure website, stock market software or platform using your personal computer and your own Internet connection, and make orders for buying, selling and trading directly on that site.
Knowledge of the stock market is vital and many people don't feel that they have the expertise to carry out their own trades without using a broker. While this may very well be the case, one of the big advantages of online stock trading is that trades are typically much less costly than normal broker-covered trades. That means that you can afford to invest a few dollars in a stock on nothing more than your own "hunch" or instinct because the transaction fees for online stock trading are typically very low.
At the same time, it's important to track the number of trades you're making and to be clear about the charges being levied for your trades. You may find that you're making more trades that you thought and the bill for those trades may seriously cut into your profits. Another advantage is the control you have over your trades. Have you ever been a bit embarrassed to admit to your broker that you want to take a chance on a particular stock? Or had a broker talk you out of a transaction that later turned out to be profitable?
Online stock trading can help you make those transactions without worrying about what a broker will say or think! Convenience is a big plus for many people, but it can also be a problem. Using online stock sites, you can do research, make plans and place order anytime - day or night. This is also one of the potential pitfalls.
If you're looking at a particular stock and decide that it'll be a good buy on Friday evening, you have the option to go ahead and place your order for the purchase right then. But remember that the order won't be carried out until the next business day. Plenty of activities can occur between Friday night and the opening of business Monday that can seriously damage your profits! One of the potential disadvantages is that you don't have the direct contact with stock brokers who can offer opinions and advice about particular trades you're planning to make.
Keep in mind that you sometimes need the advice of those in the know about stocks. Unless you're pretty confident of your knowledge about the stock market and your stock trading abilities, you may want to continue to use a broker for at least some of your stocks trades.
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