What Are the Differences Between Online Stock Trading and Traditional Stock Trading?

In today’s busy world, it seems as if everything is available online and instantly. For traders, this is often seen as a bonus. After all, who wouldn’t relish the opportunity to make big money, fast? However, there are some traders who prefer the traditional stock trading methods, as opposed to online retailing. Here, we take a look at the query, ‘What are the differences between online stock trading and traditional stock trading?’ in order to find the answer.

The first difference is the manner in which an order is placed. In online stock trading, traders can place trades instantly using their online account. This account allows them to access an online trading platform hosted by their brokerage. In traditional stock trading, a trader must telephone their broker in order to set up an account. Thus trading takes on a more personable nature and as a result is less instant to carry out.

The second comparable difference is the ease with which information can be accessed. Online trading means that a trader can have a whole world of information at his fingertips in the time it takes to enter a search term or click a button. The practice of online trading means that stock market data can be sent from an analyst to a trader in moments. On the other hand, those involved in traditional stock trading will obtain their information from traditional sources. This could be via newspapers, journals or television programmes on financial channels. It could also be from their broker. The disadvantage with this is that information from any of these sources, bar the broker, will never be at up-to-date as those which can be accessed online. Relying on a broker to provide you with only the very latest news may indeed be a risky strategy.

The last main difference between online stock trading and traditional stock trading lies in the type of customer-client relationship offered. In this regard many traders may well view the traditional stock trading methods as preferable. An online brokerage may deal with many hundreds of clients each day, and thus a trader may not be assigned his own personal broker. Conversations with the broker may be brief and fragmented, with the onus being on placing the right trade, rather than forming a working bond. Conversely, traditional stock brokers tend to pride themselves on the long-standing relationships they build up with customers. In this respect using a traditional stock broker may feel more emotionally rewarding.

When answering the question ‘What are the differences between online stock trading and traditional stock trading?’ we can see that the differences lie in both the type of relationship provided and the instantaneous nature of the information available to the trader. Ultimately, the choice between the two types of trading is down to each individual.

Risk warning: Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment. 

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