Online Electronic Trading

If you think that you have to go through the hassle and expense of a traditional brokerage firm or some other cumbersome middleman just to buy or sell stocks, then you are mistaken. The reality is that with the explosive growth in high speed Internet service, individual investors have been given an unprecedented opportunity to buy and sell stocks directly from stock exchanges. How can this be done? Through online electronic trading services that put you in direct contact with the electronic trading systems that most major stock exchanges use. In North America, this means hooking into the Electronic Communications Network, which is an independent network that has been established to let a number of major North American exchanges communicate with each other. When you use an online electronic trading service, you are given the ability to tap into this powerful network to buy and sell stocks, all without having to go through a traditional middleman.

Why would you want to use an online electronic trading service when you have always just called up your broker when you want to make a trade? For many individual investors, they are excited about the ability to make near instantaneous trades; when you are hooked directly into the electronic networks, you do not have to wait for your broker to receive your instructions and then execute them. If you are a day trader this is imperative, as minutes and even seconds can have a huge impact on your investments and your daily profit. Online electronic trading services are also a good idea because they will save most investors money. The traditional brokerage firm that you currently use likely charges you a commission based on a percentage value of your transaction. Online electronic trading services, on the other hand, usually just charge investors a flat per transaction fee, sometimes combining it with a volume discount for active traders. Obviously, this can have a significant impact on the cost of keeping your investment portfolio healthy. It should be noted that most online electronic trading services will charge you a monthly access fee. Nonetheless, for many investors the flat rates charged by the online services will represent a significant savings over the commissions they are paying to the traditional brokers. Before signing up with an online electronic trading service, as great as they are, it is important that you know exactly what you are doing. These services are not designed for new investors. If you are a seasoned investor, however, now is the time to sign up.