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History of Online Stock Market Trading - Online Trading - Global Scenario

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History of Online Trading :

In recent years the internet has become an increasing part of people's lives. There are few places in the world that it has not reached. Since the internet has the power to reach this many people, many companies have started to conduct business on it. People can shop online and purchase almost anything they want right from their homes. With the advent of this new technology, the stock market was bound to become part of this new world. Since this information can be gathered so quickly, it was not a shock when online trading took off at such a rapid pace.

The first major company to start trading online was Charles Schwab in May of 1996. At first, they were hesitant because of the security risks involved and because at that time the internet was not as fast as it is now. They had planned to launch online trading a year before but did not because they wanted to be confident that the transactions were safe. Some other companies that started before Charles Schwab were the Lombard Institutional Brokerage, the Pawns Financial Network, and E* Trade Securities. Of those four companies, E*Trade and Charles Schwab had the most success Charles Schwabb is now the largest company in online trading. They realized that by using the internet, they could reach customers that never would have dreamed of investing in the stock market.

 

Another successful company to offer online trading was Fidelity. Fidelity was the first investment firm to allow their customers to “move money from one investment option to the other” in their 401 (k) and 403(b) retirement plans. (Houston Chronicle I). customers had total control over the investments that were being made into their retirement plans. Many companies would eventually allow their customers to do the same. Fidelity eventually allowed investors to buy and sell their own stocks on the market just as Charles Schwab and E*Trade had done before. Now the United States has just over 150 companies that allow investors to trade online and the number is continually increasing.

 

Online Trading - Global Scenario :

Online trading has become very popular in the last couple of years because of the convenience of the case and use. Numerous companies have gone online to meet their customer's demands, enabling them to trade when they want and how they want to. Trading has existed for as long as we can remember and when we talk about it. We are referring to trade as in financial dealings. Trading is the buying and selling of goods and services, but in the current context, it is the buying and selling of financial services, including securities, through the World Wide Web.

According to Dixcart Online (one of the online brokerage firms) "Internet will rapidly become the normal way to purchase any goods and services in the future"

Online trading has basically replaced a phone call with the Internet. Instead of interacting with brokers over the phone, the customer is clicking the mouse, not to mention that other options are still available but at a cost. Online trading has given customers real-time access to account information, stock quotes. Elaborate on market research and interactive trading. Further online trading has led to additional features such as

 

• Limit/stop orders- orders that can go unfilled, but there is an extra charge for this layaway facility since one needs to hold a price.

• Market - orders-orders can be filed at unexpected prices, but this type is much riskier since you have to buy the stock at the given price.

• Cash account-where funds have to be available prior to place the order and margin account.

• Margin account - where orders can be placed against stocks, to increase purchasing power.

With all this in mind, we need to see the advantage and disadvantages associated with online trading.

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