Online Trading Explained

online trading » Online Trading Explained
Online Trading Explained 2020-02-14T16:37:58+00:00

To make trade, you as an online trader have to register an account with an online trading company. You will login and follow instructions.

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How to trade

For example, Steven wants to buy 50 shares at Eskom, if he wants to buy them through a broker firm, he will call his broker with a buy order request. The broker will let Steven know the price in the market and confirm the purchase order.

If John, as an investor or trader wants to make a limited order, the broker will advise him on the limit price. He will also let him know how long Steven can keep the order open.

Your advisor will also confirm the commission costs for proceeding with the trade. When all necessary information is ticked on the checklist, your representative will put your order in the trade system. The trade system is linked to trading exchanges and floors such as the Johannesburg Stock Exchange (JSE).

After all is done, you will receive a confirmation by email or statements of account displaying your investments list if you opened multiple accounts. If you think you have made enough money and you want to transfer to your personal account, you can do so. You will transfer money from trading account to your bank account.

DIY Investing

If you don’t want to approach a trading or an investment firm or broker, you can do so through the use of internet at the comfort of your own home. This method is called Do It Yourself, also known as DIY. Online trading tools serve as a venue with various tools for the traders and investors.

As a trader, you have power over what you do. You can register an account and start trading immediately. You will be able to do the following through the dashboard:

  • place buy and sell order
  • stop
  • stop-loss
  • place market
  • check order status
  • read news on trading companies
  • View real time stock quotes and many more.

You will also be able to view your investment statements any time using the online system. Most trading firms are affiliated with banks and they make transactions easier for you. They link your bank account with their accounts.

Benefits of online trading

  • Saves time
  • Reduce costs for both discount brokers and investors
  • Lower fees have made the capital markets accessible to anyone
  • It improves the speed of transactions
  • No paperwork needed for an order
  • You receive confirmations
  • Is accessible anytime and anywhere

Online Trading security

Before you open an account with a trading company, you will be asked to complete an online questionnaire to determine what kind of trading account will best suit your needs. If the trading company sees that you don’t have any knowledge about trading, they will open a simple cash account for you. This is to make sure that your money is safe and you get to understand various types of trading strategies and securities on the market. Your simple cash account will help you buy and sell orders, bonds, EFTs and mutual funds.

It is important to understand what you are getting yourself into before signing up with any company. This will give you a peace of mind knowing you did your research and you are confident about your decision.