The Real Reasons Online Trading is So Popular

If you thought online securities trading was popular because of the low commissions, easy access to leverage, vast menus of assets, sophisticated apps, ability to copy expert investors, and one-click mobile transactions, you’re on the right track. In the 2020s, computer-based buying and selling of securities have become standard operating procedure for working adults who enjoy playing the markets for fun, profit, or as a second job. Here’s why many are flocking to device-based transactions.

Low Cost

There’s no more effective way to bring customers to your doorstep than with low prices. In the case of trading firms, that translates into minimal or no commissions on everyday transactions. Dozens of the biggest names in the securities field offer no commission trades to their customers. In forex, the situation is a bit different, with companies earning their profit not on commissions but on the bid ask spreads on each currency pair.

But, in addition to low or no commissions, new account holders also benefit from exceptionally low opening balances. Just a decade ago, it was unheard of for a financial company in the securities industry to advertise minimum opening balances below the $1,000 mark. Now, some of the biggest names in the industry accept one-tenth that amount to initiate an account. Alongside both those enticements are low fees and charges, which refer to annual bills for maintaining accounts and special charges for things like exceeding margin requirements, long periods of inactivity, and more.

Easy Access to Leverage

For those who are not familiar with how leverage trading works, now is the time to gain a basic understanding of the process. Many financial services organizations, including banks, brokers, S&Ls, and others, let customers leverage their existing capital. The result is that someone with a small balance, and approval for 10:1 leverage, could open a transaction for ten times their available capital. In equities markets, brokerage companies approve clients who apply for leverage. Not everyone who applies receives the same amount, and not all applicants get as much as they want. However, particularly in the forex markets, service providers regularly make very high leverage available. It’s not uncommon for a forex trader to use leverage of 250:1 when taking a position as a seller or buyer of a specific currency pair.

Wide Choice of Assets

People who have never used the internet to make purchases for portfolios are surprised to discover the sheer variety of asset classes available to the average retail buyer. In addition to the usual lineup of equity shares, bonds, commodities, and precious metals, most of the top online purveyors offer at least one of the following: CFDs (contracts for difference), ETFs (exchange traded funds), mutual funds, options, futures, cryptocurrency, forex currencies, and indices. Price barriers are nearly non-existent in the net-based securities economy. That’s because most brokers work hard to make it easy for new account holders to get set up. Features like low opening balances and fractional shares are just a few of the ways service providers make it so convenient to do business in a computer-based ecosystem.

Powerful Apps & Platforms

Technical analysis is one of the most powerful tools in the securities world. Fortunately, anyone can harness it through apps and various platforms that enable technical analysis. Many account holders use popular technical indicators like MACD, momentum, Bollinger Bands, and moving average crossovers. While there’s math involved in all those techniques, platforms, and standalone applications make the whole thing a simple affair. In fact, when internet-based firms began offering sophisticated technical analysis tools to their customers a decade ago, the major shift toward online brokers began in earnest. You can check for the best trading laptops here.

Copy Trading

Copying the trades of experts is one of the newest forms of automation on brokerage sites. Not every arrangement is the same, but the commonalities include the chance to select one or more people to follow and the ability to commit a fixed amount of capital to the setup. Some experts, often called leaders, charge a flat or percentage-based fee linked to their success and raw profit levels.

Mobile-Friendly Transactions

Now that many of the top online brokerage firms are offering anytime, anywhere trading capability via smartphones, the retail trend toward increased investment in all securities markets has gotten a huge boost. No longer do customers need to sit at desktop computer stations to place orders or exit positions. But, it’s important for prospective and new clients to note that not all mobile apps are created equal. Some are much slower and glitchy than others, so always do a free trial before making a decision about where to open an account.

Justin Weinger

A married father of three, Justin Weinger works in private equity as a Corporate Finance Manager, he is also an avid blogger and personal finance enthusiast with a strong history of working in the automotive and publishing industry.