Trading has been use since the earliest times – from the prehistoric ages to the medieval ages, and even up to now. Our ancestors have been using the trading system when money was not yet available. Back then, trading was more like an exchange or barter of goods – where farmers would trade their cows with fishermen for fish or trade their goods with merchants for oil, thread, wine and leather. But nowadays, with the existence of money and the presence of the Internet, trading is now done online.
What is online trading?
Online trading is a general term use all the trading done through the World Wide Web. As you may well already know, almost all businesses are using the Internet and this includes trading. The art has evolved from the old days of trading, wherein the collector or the trader needs to be physically present during the transaction.
Nowadays, traders and investors can stay at their homes and watch what is going on at the stock markets all over the world. With a computer and an Internet connection, traders can exchange information with other traders, look for potential stocks to buy or sell, get updates of the stock exchange and the values of different currencies with just a click of a mouse.
Websites that allow you to buy and sell stocks in the market are already available online, making it easier for individuals to do trading. In the past, traditional trading was done by individuals called brokers, because they were the ones who got information such as prices, market values and appraisals.
It is also the broker who will find buyers and sellers and set-up meetings for both parties to come up with a deal. Once the deal is made, the broker will then charge a certain amount or percent of the payment as commission.
In online trading, it is the website who will act as broker and just like a traditional broker – charges are also applied by the said websites. However, compared to the traditional trading wherein you’ll be calling your broker to place orders to buy or sell stocks, individuals engaged in online line trading can place the order directly online, or they can even trade directly with other companies and investors – making trading more convenient and much faster.
It is also worthy to note that the brokerage fees provided by these online trading websites are significantly lower compared to hiring your own personal broker. Another good thing about online trading is that you can choose to have all the control over your investment with just the broker’s advice and guidance, or you can choose to have limited control and leave all the control to your broker.
Either way, with online trading – you are your own boss and you will have the power to decide what to buy and what to sell.
How can I start trading online?
Before you engage in online trading, you must first do an extensive research in order to fully understand how the system actually works. You need to be well educated of the ups and downs of the system, as well as the trading concepts, in order for you to maximize your profit and to avoid getting broke. You also need to pick the right online software that you will be using in the trading. Online software will help you figure out market costs, pricings, monitor stock exchange, and even analyze reports.
As an investor who is new to trading, you also need to search for a reliable online broker for trading on the Internet with a very good reputation and experience, so as to avoid being scammed. The advantage of picking the right broker is that they provide you with valuable tips and comments. Besides, if you are still new in the business you need all the help you can get. You also need to understand the potential risk that you may encounter once you start trading.
Before any commitments are made to the online broker, you must understand the terms and conditions that are being offered. This is to avoid potential problems in the future, like who pick the stocks or who has full control of your investments.
Brokers are also very essential when you’re still new in the trading business because they have been in the business for quite a time and their education and experience in trading will prove very useful on your part.
If you have already chosen a online brokerage firm or website you can now start trading. You can now choose the stocks you want to buy or you may ask for advice from your broker like what stocks, bonds, mutual funds, and options to purchase.
The broker would then look for potential seller or buyer to match your offer to get a deal. When a sale is made, payments are done by deduction of funds from the buyers account – and this ends the transaction.
Commissions and payments to the brokers are automatically charged once the sale is made. It is here where the brokers will help you maintain the ownership of your stocks, or help you determine as to when or to whom you should trade them.
As time progresses and you think that you can go on trading without the assistance of online brokers, you can now terminate their service and continue to trade on your own.
Online trading is one of the easiest and fastest to make money. This is why it has gained such popularity nowadays. Currently, retirees are already investing their retirement funds in online trading and fortunately, some are enjoying their profits.
If you think that have a very good eye for the market and you believe that you have very good decision-making skills – you can give online trading a try