13.6 Advantages/Disadvantages of online trading

Hanumant Dhokle

The following table enumerates the positive and negative factors of online trading.

Advantages:

  1. Informed decision-making and access to advanced trading tools.
  2. Traders have direct control over their trading portfolio
  3. Ability to trade multiple markets and/ or products.
  4. Real time market data.
  5. Broker Independent
  6. Faster trade execution which is crucial in day trading and swing trading.
  7. Discount commission rates (online trading favours active traders who want to make  quick and frequent trades).
  8. High leverage offered by brokers for trading on margin
  9. Easy to open an account and manage it.
  10. No geographical limits.

DISADVANTAGES:

  1. Need to fulfill specific activity and account minimums as demanded by the broker.
  2. Greater risk if trades are done extensively on margin.
  3. Monthly software usage fees
  4. Chances of trading loss because of mechanical/platform failures and the need for a speedy internet connection.
  5. Online traders are fully responsible for their trading decisions.
  6. The fees involved in trading vary considerably with broker, type of trading account and soft ware.
  7. Some online brokers may also charge inactivity fees on traders.
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