There are plenty of pros and cons to online stock trading, but most traders usually prefer the conveniences provided by trading online. Check out the benefits so you can decide if you should give online trading a try.
One of the main benefits of online trading is doing so on your schedule. Sure, you have to adhere to the market’s open and close times, but you can plan your trades at 3 am and execute them instantly thanks to online trading software. In addition, some online trading sites allow for international and Forex trading, so there’s always an open market at different times of the day.
One of the primary benefits of online trading is that the fees associated with each trade can be much lower than a guided brokerage. Fees for online trading range from completely free in a service like Robinhood, to a guided online brokerage that offers trades for $6.95 and thousands of free ETF trades. The low fees can be a boon to people who are willing to be very hands-on with their trades, but you shouldn’t discount the valuable advice from a broker. Some online trading platforms are even offering subscription brokerage plans that feature guided trades that is reminiscent of how trading used to take place before online trading became a viable option.
Online Trading is Inherently Riskier
For newbie investors who are just starting out in the world of investing, it’s like sending a seal into shark-infested waters. Most brokerages offer guided assistance to customers who are willing to pay more, but being able to jump in head-first without proper training can cause a lot of financial damage. This fact is especially true if you’re coming from an investment portfolio that is managed by a brokerage for you. Make sure you spend time educating yourself about the market and only make small-time plays in the market while you’re learning. TD Ameritrade offers a tool called Think or Swim that allows you to make trades using paper money and real market data, so no actual money is put at risk. Consider using this tool as you’re learning to test your investment strategies.
No Financial Minimum to Get Started Trading
Most online trading platforms offer no minimum to get started trading on the platform. People think you need tens of thousands of dollars needed to invest, but that’s untrue with online trading. You can find trading opportunities that only require a few hundred dollars and start from there. With free trades offered by the Robinhood platform, you can even start with just $100.
Learning Tools and Resources
Most online trading platforms know that the bulk of their customers will be inexperienced investors dipping their toe in unfamiliar waters. Some have gone the extra length to be more accommodating to these financial newbies in the hopes of getting them to stick around and become long-term customers.
For example, TD Ameritrade’s Think or Swim platform uses paper money (no value) and real market data to help newbies plot their trades without risking any money. You can test your strategies against real-time data to see if you’re consistently picking winning strategies. Since this essentially teaches you the ins and outs of trading without putting actual money at risk, it’s one of the best platforms for beginners to get started.