- The first organized stock exchange originated in Philadelphia in 1790, and at the time was the only avenue to trade, placing orders directly with a stock broker or trader. Eventually with the inception of the New York Stock Exchange in the 1820s, trading and even owning a seat on the exchange became easier to be a part of it all. OTC, or over-the-counter, personal stock brokers have been, and are still present for those who want to trade through them using their professional advice. Discount brokers are used regularly as well, who charge a lesser fee than a full service broker, but offer no advice. Today trading online has become a common practice, without directly using a broker.
- Being a member of an online trading site allows log in and trading using any computer that is connected to the Internet. The sites are operated and managed by a brokerage firm, who is responsible to be certain that all trading regulations are followed. The site provides streaming real time information along with listings of stocks, bonds, options, commodities and other investment instruments. The site also offers a ledger or personal record of the status of the investors account and holdings. Research tools are also made available.
- Some advantages of trading online would be that there is a great savings by not having to pay a full service broker commission fee, which is typically a percentage of the trade amount. Trading fees are still charged by the brokerage firm who owns the site but are typically minimal and based on a per trade scenario. Assistance is available during trading hours by the broker firm who runs the site to help navigate through the site and answer any questions, so the trader isn't left all alone to troubleshoot a problem, although no advice is offered regarding what to buy or sell. Trading online also offers moment to moment control while monitoring open investments, having the ability to trade instantly as the occasion arises, versing having to call a broker to do so. Also, online it is also easy to "paper trade" or "virtual trade," which many beginners do, which is pretend trading, before actually investing real dollars. There are also sites that will allow a trader to get started with a minimal capital investment in an account, which can be attractive.
- With online trading being made so readily available it offers the opportunity to even become a day trader. A day trader buys and sells numerous times per day. Buying 1000 shares of stocks for instance at $20.00 per share with the anticipation that the stock will increase in value quickly, and then the trader will sell them as soon as they go up in value, even if slightly to $20.35 for instance, making a quick profit. At the end of the day, the day trader hopes that their accumulated trades created a nice profit. Also, with online trading, many people who may otherwise never enter the market are able to do so and invest in businesses, which helps to enhance the economy in general.
- Contacting at least a few online trading firms to see which one fits best before signing up is suggested. Some firms may have a larger deposit amount required than others and some may not offer the level of personal service needed. Then others may specialize in certain investments only, and not offer a full spectrum of product to trade. Also when an investor is buying volatile penny stocks or options for instance, visiting the site often to watch the investments closely is suggested, as these instruments have a tendency to fluctuate quickly in value. Remember without using a broker, the investor is completely responsible for his own actions with no broker to blame for not selling out on time or buying more while the price was low. Trading is considered to be a high risk venture, so due diligence should always be practiced.
