Introduction to Online Trading

What is online trading

Trading in the Global Environment

With the advent of technology and the process of globalisation, trading has taken a new toll in the financial markets. Forex, traders, signals and binary options are only a few words that may seem a hurdle for those who are not acquainted with the trading environment but which are, in fact, simple jargons used every day by those who devote their time in a highly lucrative investment- trading. Trading is an art and like most arts, it requires constant practice and, above all, the necessary knowledge. Traders, who want to achieve success in either the Forex or the binary options arena, should accumulate enough information before diving into the financial investment arena.

A retrospective in trading

Securities markets began in the late 18th century in the United States, following other types of trading inspired from European markets. The first stock exchange was set up in the city of Philadelphia and the exchange in New York saw the light in 1792 when merchants and brokers instilled commissions while they acted as agents for investors or third parties. Trading started on Wall Street itself and today it has become the world’s leading hub for global markets. During the 1970’s and 80’s, both investors and brokers used land line to execute trade transactions. After some time, they started using the Electronic Communications Networks as a means to display all bid and ask prices for stocks. The latter consisted mainly of government securities, banks stocks and insurance companies added their assets in. In 1971, a group of dealers known as the National Association of Securities Dealers developed a computerized trading system called NASDAQ. The latter allowed members of the association to post bids and offers for various groups of stocks. Thus, began the creation of “over the counter” market. The OTC trading took place through various communication media such as telephone and telegraph. In 1990’s, online stock trading hit the market when the average investor started having access to information. This pushed trading to new heights as cost were minimised. Soon, the markets started getting populated with investors and brokers and the whole landscape for trading changed.

Online Trading and the role of a broker:

why trade onlineWith technological advances, online trading has opened up the market for anyone, who has access to the right system and the required knowledge, to act as a broker. A broker is someone who takes care of the investor’s orders regarding securities. Acting as the middleman between the securities available for sale and the investors willing to buy, brokers can either refer to an individual or a brokerage firm such as Charles Schwab or Merrill Lynch. Brokers work on a commission basis similar to that of a salesperson. When an investor wishes to enter into any trading activities, he needs to contact a broker or open an account with that particular broker. The latter will normally charge a commission based on the type of trade and the method used to execute the trade. Full service brokers are those professional brokerage firms such as Merrill Lynch, Salomon Smith Barney or Morgan Stanley Dean Witter among others. Apart from acting as the middleman, they provide trading advice, tax planning services and other relevant value-added services that would benefit the investor. They user offer a wide range of products ranging from derivatives to insurance and work in close collaboration with offshore centres for tax and investment planning schemes. As the industry progresses, we see that more brokers are diversifying their portfolio of products and services to include options trading.

Options Trading: A New Dawn

As technology progresses and demand for new products arises within the financial world, many investors are investing into mutual funds, bonds and stocks. However, recently something hit the market and has been flourishing until now. Known as options trading, they enable investors to adjust their positions according to current market events. Also known as binary options, the latter only require the investor to speculate over the movement of the asset involved. Versatile and powerful, binary options trading requires good amount of knowledge, especially for someone who is a newcomer in the securities and derivatives markets. However, anyone with the right information and sufficient training can start trading digital options and even succeed at making huge profits out of them. Nowadays, binary options trading has taken a new turn as more people are entering the trading arena and not limited only to traditional traders. Anyone, with an internet connection and the right information, can start trading binary options online. Continue reading about Binary Options
Priscilla Camryn By: Priscilla Camryn