Before the widespread use of the Internet, trading in the stock market was generally broker-oriented. The broker will give advice, trade the stock and eventually pocket a hefty commission once the deal is closed. Also, to trade, one had to be physically present at the exchange or rely on multiple phone calls to the broker house. But, with the advent of the Internet in everyone's life, the way stock trading is like everything else in today's world has changed radically.
Online trading services are done through secure websites and proprietary software applications provided by reputed brokerage houses or financial institutions. The trader needs to open an account and make a security deposit to start trading (in some cases, the transaction is done in real-time through the trader's bank account).
The primary benefits of online trading are:
In traditional stock trading, the commission varies from broker to broker, in contrast, in online trading, the commission is very low and almost the same for all stocks. Therefore, low-priced stocks can be traded in a short period with considerable profits. The low commission fee also enables the trader to make a profit from the slight rise or fall of the stock within a day.
Unlike traditional stock trading (the trader calls the broker, sets the price, and makes the payment at the end) where the entire transaction can take hours, an online trader can complete the entire process in minutes.
Perhaps the biggest advantage of online trading lies in the minimal investment required to start a business. The trader invests a minimum amount and while trading, the broker (whose online service is being used) can lend up to a certain amount to close a deal which can be easily returned later.
Online trading is a good option for anyone looking to earn better and supplement regular income. To start trading online, it is a good choice of a trading house to just research trading techniques, assess self-competence, and get affiliated.