13.6 Advantages/Disadvantages of online trading
The following table enumerates the positive and negative factors of online trading.
- Informed decision-making and access to advanced trading tools.
- Traders have direct control over their trading portfolio
- Ability to trade multiple markets and/ or products.
- Real time market data.
- Broker Independent
- Faster trade execution which is crucial in day trading and swing trading.
- Discount commission rates (online trading favours active traders who want to make quick and frequent trades).
- High leverage offered by brokers for trading on margin
- Easy to open an account and manage it.
- No geographical limits.
- Need to fulfill specific activity and account minimums as demanded by the broker.
- Greater risk if trades are done extensively on margin.
- Monthly software usage fees
- Chances of trading loss because of mechanical/platform failures and the need for a speedy internet connection.
- Online traders are fully responsible for their trading decisions.
- The fees involved in trading vary considerably with broker, type of trading account and soft ware.
- Some online brokers may also charge inactivity fees on traders.