Decades ago, trading on the stock market was reserved for the wealthy or influential members of society. Easy access to the internet has now allowed almost anyone with a computer or smartphone the ability to dabble in stock trading online. If you’re new to the scene, here’s an overview of the most common benefits and drawbacks of online stock trading to help you decide if it is right for you.
Benefits of Online Stock Trading
Lower Fees Associated with Trades
Each trade results in a specific fee that is associated with moving funds from one fund to another. Online stock trading has the benefit of much lower fees for each trade that is made. While they vary among each platform and fund type, online trades are much more accessible to the average trader.
Avoiding Bias from Stock Brokers
Going through a traditional stock brokerage company can also allow for their personal bias to get in the way of your decisions. Stockbrokers can be influenced by their own opinions of specific stock ventures and may offer advice that is not best suited for you. When you take matters into your own hands and perform your own trades online, you can avoid the potential for bias and conflicts of interest.
Speed of Transactions
As you become more experienced in the stock trading process, you will discover how important it is to be able to act quickly. Time is critical in the execution of many successful trades. Nothing can be faster than logging into an online trading platform and clicking a few buttons to execute a trade at the exact moment it needs to be performed. Meanwhile, brokerage firms sometimes require appointments to be set up in advance and their availability may vary drastically from day to day.
Drawbacks of Online Stock Trading
Temptation to Invest Too Much Too Fast
Stock trading is a learning process of trial and error. It involves patience and a continued desire to remain educated about the overall process. Having immediate access to an online stock trading platform may tempt some to invest too much money too soon. Since you can make any desired changes at the drop of a hat without consulting with a professional, be careful where and how much you’re investing.
Trading Can be Addictive for Some
Just like gambling, the process of trading stock can be addictive to some individuals. These people may experience a similar emotional high when a particular stock trade yields high dividends, producing the desire to engage in riskier stock trading behavior. Without the experience and foresight needed to make good decisions regarding less stable types of stock, you could be looking a huge loss.
Technology is great when it works properly, but mistakes sometimes occur. Internet connections can be poor at times, resulting in crucial time lost that causes the individual to lose out on an important trade. A computer glitch can give the impression that a transaction did not go through when it actually did, resulting in a person processing the same trade twice and spending more money than they intended. While these may seem like small errors, they can add up over time.
How to Find the Right Stock Trading Platform
For those looking to get into online stock trading, finding the right platform to use is important. The following three platforms are the most common for online beginners.
* Ally Invest
Ally invest is one of the best options for low-cost trades for the inexperienced beginner. At a flat rate of $4.95 per transaction, newbies can get their feet wet without spending a fortune.
This option is best for slightly more experienced traders who want additional options for each trade they perform. An easy-to-use interface and interactive tools make the process easier while still providing additional trading options.
Fidelity offers the best options regarding quality of stock trades, as well as relevant research related to trading. It offers low fees similar to the two platforms mentioned above. Fidelity also has additional options for very experienced and active traders.
You can learn more about these platforms and online stock trading at Reviews.com: https://www.reviews.com/online-stock-trading/