Online Stock Trading Vs. Traditional
The Internet is a key tool for performing all types of tasks, not the least of which if processing financial transactions. Whereas buying stock once required a phone call or in-person visit to a broker, investors who use online stock trading services can place orders and receive payments electronically. But each option for trading stock still has advantages and drawbacks.
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Speed
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The speed with which you can make online transactions is one of its biggest advantages over traditional stock trading. Rather than waiting for a human broker to place an order, you can wait for prices to reach a certain level before jumping on an opportunity to place an order. While online stock trading doesn't happen instantaneously, it is still the fastest method available to most private investors. Speed also means you can perform more transactions in a limited amount of time, such as just before the market closes for the day or as soon as it opens.
Guidance
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One key drawback of online stock trading is the absence of the human element in the form of a broker you can speak with and ask questions. While online brokers have frequently asked question sections and online help features, they can't match the interactive element of establishing a relationship with a broker you grow to trust and learn from.
On the other hand, if you prefer making decisions on your own, the absence of a traditional broker can be an advantage. Online stock trading allows you to place orders any time the market is open without consulting a broker or needing to explain your decision.
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Cost
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Online and traditional stock trading differ greatly in terms of cost. While neither offers a single price for every transaction, online trading is generally much less expensive. Some online trading services offer free trades for new account holders or flat rates that make it easy to track how much you spend on trades. Traditional brokers charge commissions that support their business and are often based on a percentage of each transaction.
Information
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When you trade stock online, you have access to a plethora of information, from interactive charts and graphs to long lists of historic prices and earnings estimates. Online broker services also compile news articles about companies to help you understand where you're investing. This information can be difficult to wade through in working toward the best investment decision. Making trades traditionally gives you access to a broker who can help filter information and direct you to only the most useful resources.
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Comments
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