Online Trading Solves What Exactly?

Písmo: A ++ A --

Trading online does not give you better fills than regular order placement. The only thing it does, it bypasses your broker. This means, there is an increase in the speed of getting an order to the floor. From there, the order is handled the oldfashioned way. (if you are a position trader, this is totally meaningless. If you are a day-trader, speed is important).

The floor reports your fills not any faster or any slower than with regular order placement, except that they show up on your computer, rather than your brokers desk.

There is an obvious risk to the brokerage firm, when dealing with online accounts: they have to worry about overtrading and accounts going below zero. With normal accounts, the broker acts as a buffer to keep things in line.

For this reason, many so-called online firms hold the order you placed on your computer, to check you account equity, before letting the order continue to the floor. If this is the way its done, you lose the speed advantage completely.

Other firms do not hold up your order for an equity check. Those firms protect themselves by asking for higher account minimums and by allowing each customer to trade only a predetermined position size.

Many new traders simply dont know enough about the markets to trade online. They need an experienced broker to keep them out of trouble.More important than all these things is the question, are you really ready to trade online? Online trading is only for experienced traders, not for new traders. Many new traders simply dont know enough about the markets to trade online. They need an experienced broker to keep them out of trouble.

An experienced trader is better suited for this, but even he/she will make the typical simple little errors, such as typing buy, instead of sell. When your regular broker makes such a mistake, he is liable for it. Not so with online trading.

Tom out