With the immense technological advancement and the advent or invasion of computers at almost every nook and corner of this world, the concept of Internet stock trading has gained massive popularity among all sections of the masses.
Stock trading, which has been a way of profit making for only a privileged few for ages is now exercised by all and sundry.
Internet stock trading has in fact become the second source of primary income for millions of people of varied professions all across the globe.
Due to its speed and transparency in trading methods, Internet stock trading is preferred by many.
Nowadays, with the sophisticated technologies in place, Internet has provided the investor a major trading platform.
Similarly, the brokers have also been equally benefited by these technologies.
Internet now acts as an interface between the stock exchange, the broker and the investor for executing various securities transactions.
An online broker can execute a large number of transactions for a large client base.
More importantly these extremely sophisticated and efficient technology and software are now available at very low costs.
Technology is also getting upgraded day by day to keep pace with the growing and varied needs of the customers.
To begin with, the investor signs an agreement with his Internet broker and gets access to a password enabled trading terminal on his computer.
Thereby, he gets access to real-time trade information on the offers and bids.
He also gets information such as the last offered bid, volume last traded including the rate and quantity.
He can set his own choice of market watch for various shares that he is interested in.
Internet also enables him to constantly track his portfolio, the value of which gets updated on a real-time basis.
Internet-based stock trading is fast, hassle free and transparent.
Once the investor places his order, it goes to the broker's trading server and from there to the main stock exchange.
After the order gets executed, the confirmation along with the order number, trade number and time of execution all flows in to the client.
With the type of interface that works in an Internet-based stock trading mechanism, the brokers have full power to control the activities of their clients on a real-time basis.
The broker can fix advance exposure limits of the clients on the basis of the deposit by the client with the broker.
Risk management for brokers has thus become easy and the mechanism is absolutely flawless as is needed while dealing with these faceless customers.
The traditional methods of placing orders either through phone calls or by personally visiting the broker's office are now almost forgotten stories.
The days of face-to-face interaction generating arguments, frustrations, debates, discussions and disputes are now over.
Increasingly busy life and acute time crunch has gladly led to the acceptance and adoption of the new system of Internet-based stock trading.
Ease of trading and settlement along with reduced transaction costs of seamless trading systems have made the life of brokers as well investors a lot easier.
The advent of Internet-based trading have brought about a sea-change in the volume of stock transactions made per day, the nature and settlement of stock trading and the profile of market participants.
Internet stock trading is considered an exciting way of trading in stocks as transaction can be completed within minutes and sometimes within seconds.
With the immense popularity of web-based stock trading, there might be a huge number of investors online at the same time executing orders and that might result in very quick price changes.
At times, there might be communication lags and this factor might make online trading a bit risky affair.
All investors performing online trading are thus advised to set price limit orders as a safeguard against major losses.
Even with all its benefits, Internet stock trading has its own flaws and might prove to be extremely risky at times.
It is therefore always advised that investors should only trade with money that they can afford to lose.
Constant alertness is another primary requirement of Internet traders.
It is essential that you spend some time learning the basic facts and figures of online trading before venturing into it.
With knowledge comes wisdom, which can improve your chances of increasing profits.