Open An Online Trading Account to buy stocks Online

Have you open an online trading account to buy stocks online? If you have not, pardon me for the bluntness, you are still living in the dinosaurs’ age! In fact, for those who already had been trading via internet, chances are, your trading platform window is opened at the other end of the screen while you are reading this article.

In traditional trading, trades are executed through a broker via phone or other communicating method. The broker would advise the trader, sometimes giving “tips” to assist the decision-making process. In return of this service they charge commissions on traders, which is often higher than online rates. A lot of people are still putting orders through their brokers/remisiers. For them, their brokers could be their personal friends, so they want to continue to patronize them. Some may still be more comfortable with this approach, while the reminding, especially the elderly, may had found difficulties figuring out how to use the buttons to place orders. They still prefer to buy stocks via the “offline” method. Like a stock’s movement, trading online is a trend. It is now, and will grow even stronger and stronger because of many favourable factors.

Open An Online Trading Account to buy stocks Online – Advantages and Disadvantages

The very first and obvious reason for trading online is lower commission fee. In Singapore, take for example, if you are buying stocks with DBS Vickers, you would need to pay a minimum SGD40 if you are calling the broker to place order while the minimum amount for an online trade is SGD25. For any amount below SGD50,000 , the charges are 0.375% and 0.28% respectively for using brokers’ service and online trading. For subsequent ranges of amount, though the percentage differs, online trading commission fees are still lower. While the fee may change periodically, for examples during promotions, essentially it will still be cheaper to use online services. Generally, most brokerages in Singapore offers better rates for trading online. However, one other factor that determines the commission rate, whether offline or online, is the size of your trades. Surely, if you trade regularly and clock high volume, you are in a good position to negotiate a better rate with your respectively brokerage. I am sure they will be smart enough to offer a better rate in order to retain your loyalty.

Besides the cost, another advantage of trading online is the speed of execution. At the moment, there are a lot of instruments available for high frequency trades. For examples,  stocks, forex currencies trading, commodities, Gold, Silver, Oil, Indices and so forth. Traders are highly dependent on market charts, live data and news and they have to make almost instantaneous decision to buy or sell. By going through the motion of calling and relaying orders to brokers, it could mean trading opportunity lost in that few split moments. At the same time, the information available online is tremendous. You get access to real time stock price movements, historical data, charts and even able to place contingent orders where orders are still executed at your preferred price even after you log out. And as it evolves, automation trading and robots also start to emerge, where programs were written to assist the traders to trade hands free! Buy and sell orders are executed automatically online.

Of course, for someone who is not internet-savvy, navigating around the trading platform can be quite daunting. And pressing the wrong button, sometimes, can be quite fatal, especially if you mistook the “buy” button for “sell”, and vice-versa. And online trading is also dependable, to a certain extent, the performance of the internet connection and the trading platform server. While they don’t often break down, all it takes is a fault once in a blue moon while you are hankering to cut loss. And by the time you re-discover your broker’s contact number and place your order via him, you could be a few thousands poorer just because of a technical fault. Therefore it is crucial to note that, while we want to learn and embrace online trading, we must always have back-up preparations. Personally, I would have my broker contactable and a back-up mobile internet dongle ready, in case my main internet connection breaks down.

Open An Online Trading Account to buy stocks Online – Approach your broker

Most of the brokerages would offer free orientation and training on the usage of their trading platforms. In fact your broker will gladly assist you. While they will get a slightly reduced commission payout if you trade online, their time will be free up substantially if majority of their customers are trading online. So go ahead and open an online trading account to buy stocks online today!