Electronic Trading

Everyone understands the principle of trade in a traditional respect e.g. the exchanging of financial securities, but in the modern era of internet working it is electronic trading that is becoming the main method used to carry out trade in all major fields of industry. So what exactly is electronic trading? It effectively is the process of trade through electronic mediums e.g. the Internet. Networking allows both sellers and buyers to carry out transactions in a virtual domain – in effect an electronic trading floor that can be accessed remotely. Electronic trading can be carried out virtually anywhere and at anytime through software based packages or trading platforms, as they are commonly known. Consequently electronic trading is considered a more effective means to trade, due to the number of technological and sociological advantages implicated through the use of electronic mediums. However that said it is by no means fault free and should be handled with care, in similar fashion to traditional trading methods.

So why do people engage in electronic trading? Convenience is a paramount factor. As mentioned electronic trading is very flexible in terms of its operation; this flexibility is being realized by even the most humble of traders as a lucrative way to generate revenue. Minimal overhead costs for transactions translate as a great advantage to traders (due to automation of the trading process), as does increased liquidity and transparency within the markets available (due to ease of communication and free flow of information within the trading domain). In effect electronic trading reduces some of the barriers to market entry that traditionally existed prior to its introduction. Despite these benefits, it must always be remembered that it is the risk associated with your chosen trade that is the most detrimental factor towards trading success!

What is currently available for electronic trading? As mentioned previously software based packages (trading platforms) provide the basis used to create, guide and monitor transactions in the online world. These packages cater for the tracking of indices, securities, reports, updates etc. all useful in improving the users chance of succeeding in their chosen trades. There are many commercially available trading platforms; choosing the correct one for you may require some research. In addition online broker accounts are available (such as a CFD broker); these in effect act like traditional broker agencies, providing electronic traders with access to buying and selling securities in online exchanges, as well as a wealth of guidance and expertise. The combination of the two provide a base for starting trade electronically, they can be accessed from anywhere with an Internet connection.

How did electronic trading arise? The rapid advancement in communications technology in recent years has diminished the need for an actual physical meeting place between buyers and sellers; trade can now be carried out remotely. Increasing levels of investment into the technology that facilitates electronic trading has reduced the need for exchange floor agents and middlemen, as the process of trade is becoming increasingly automated. This factor has meant that the process of trading has become far quicker and easier to manage; it is the trading method of the future!

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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