Online Stock Trades: Advantages and Alternatives

Online stock trading is a form of investment that has become popular in recent years thanks to the diffusion of computers and the Internet. Online stock trades can be executed quickly from anywhere in the world, whether at home or in an internet café in Thailand, without the need for calling an expensive broker. With just a few clicks of the mouse one can be in total control of his/her investments.

What are the key advantages of online stock trades vs. traditional stock trades?

 

Investing vs. TradingThe lowering of barriers to entry, together with the three key advantages above (i.e., speed, access, price), has created a shift among many investors towards trading. What is the difference between investing and trading? In simple terms Warren Buffett is an investor while George Soros is a trader.  An investor will buy a company stock with no predefined notion of when he or she will sell, if ever. On the other hand, a trader will normally have a price or time target in mind to realize a profit or cut a loss. An investor may keep an asset for years or decades, a trader might keep a position just for a few minutes.

 

Alternatives to online stock tradesIn the last 4-5 years an alternative to stock trading has stormed the internet: online forex trading. Forex, or FX, is the largest market in the world and provides several advantages to stock trading:

 

As FX is normally the domain of sophisticated trading desks within the top international banks it is certainly not easy for a retail trader, normally used to online stock trades, to make the cut in forex and become profitable. Automated Systems can help an investor take emotions out of the equation.

In my next article I will discuss the benefits and shortcomings of automated forex systems. In the meantime, you can find out more find out more here about online stock trades vs forex.