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Online trading: understanding the business from all the angles

 “My own business? From home? Good profits? Yes! I accept!” Wait! Do not jump to conclusions; let’s understand this online trading era.

Along with the online trading era and its recent changes, traders have been given the right to make all their decisions by themselves, and this is such a great thing considering the independency it provides in a society ruled by technology.

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Hands in action for online trading…

Independency on your own business decisions as an online trader differs from using a stockbroker, as what generally happens. A broker usually provides input and advice, and this is not a bad thing at all, but there is nothing like the freedom of choice and the comfort it results in on a great decision taken; besides, some brokers in ABN AMRO have a biased opinion.

Regardless of the way anyone decides to trade, something must be clearly said: risk is always present, and that is why the rules of the game have to be clear. Knowing the advantages and disadvantages of trading is essential to make better decisions and get better profits; that is a fact.

It has been seen that online trading has come to significant growth in recent years, and it seems not to stop in its increasing popularity. Numbers say that over 14 million households in the U.S. have signed up online trading service, according to highly respected statistics companies. At a significant amount, then, it is crucial to where we are standing on, either on positive or negative aspects.

First things first, online trading can be very positive…

On the one hand, some of the positive aspects can be that online trading represents lower fees in general, and this is one clear advantage. The traditional brick-and-mortar brokerage firms that generate high fees in business and finances reduce a lot in transaction costs and high fees associated with them.

Also, with the structure of the online trading every user has a lot more control and flexibility in the business, the speed that online trading portals provide is a benefit to many investors, a trade can be executed almost immediately. Opposite to what traditional brick-and-mortar brokers mean over online, phone, or personal appointments to initiate a trade.

As said before, and without any negative connotation per se, brokerage bias is also possible in traditional trading; with the online concept, this is not necessary. Prejudice happens when a broker provides financial advice that benefits the broker, and this is logical; after all, it is business. Such a thing is eliminated with totally independent online trading.

Another good thing about online trading is that there is the accessibility to a universe of online tools. When we are trading online, it is easy to see that a lower cost doesn’t necessarily mean a shoddy product. Then the tools to make decisions over such a thing are very helpful. Very respected online trading companies can offer customers an impressive suite of tools so they can have valuable information and optimize their trades better.

Last but not least, on the functional aspects of online trading is the possibility to monitor all of that in real-time. With the technology of today, many online trading sites offer stock quotes and trade information; with all of the elements existing, it easy for people to see the performance of their investments in real-time.

…not all that glitters is profits!

Another harmful and hazardous thing that some people do not see is that in online trading and without a complete vision of the performance of the market,
it is very easy to invest too much too fast, this is because online trading is so easy, practically everything is one click away, so if we do not look back for a
second, at that same second, we could end up overinvesting or making poor investment choices.

On the other hand, it is also imperative to know all the possible disadvantages of the online trading business; this is first to be clear on what could happen to your investments at any extent, and also to be ready to face any situation and make the best results possible.

We have all heard about the risks from the worldwide economy business, and that is what we are doing, as there are many points in the economy when inflections may be harmful (or positive at times) for traders and investors. Take the case of the very relevant example of ABN AMRO that is running on some problems now that can, of course, affect the people investing in its platforms.

Another harmful and hazardous thing that some people do not see is that in online trading and without a complete vision of the performance of the market, it is very easy to invest too much too fast, this is because online trading is so easy, practically everything is one click away, so if we do not look back for a second, at that same second, we could end up overinvesting or making poor investment choices.

Also, and as another negative point, there is a very distant or even no existing relationship with brokers. Even when before there was an element of a biased perception in their suggestions, brokers are there also as a great deal of help. Traders are generally pretty much left to their own devices, from getting advice on how to make investment strategies to literally understanding what the effect of the results of feedback mechanisms in their market is. Of course, it all depends on how anyone feels about this kind of autonomy. If anything, the advice of experts is that it is vital to research, particularly in the case of new traders. It is essential to learn as much as possible about the companies in which investment is being made.

This, as delicate as it may seem, is a very well-conducted study from the journal Addictive Behaviors. There is a substantial similarity between the feeling of people gambling and the people trading, of course, talking about excessive trading. This financial activity has to be seen like that, and when the coloring goes out the line, then we have to step aside, think, and get back on track.

Another minor but yet necessary to mention elements noticed at a disadvantage side is the fact that we become dependent on the internet connection. When it is not reliable, then problems may start. Also, errors of clicking twice or assuming over the completion of transactions even when there is no confirmation message at sight has cost significant investment to some traders. 

At the end of the day, we can all say that online trading is a business (as any other) with highs and lows, and it all depends on how well we are taking it can be very profitable for its investors. Trying online trading will, for sure, be an excellent thing for those wanting to have some independence in the system.