Direct access trading (DAT) is gaining in popularity very rapidly, as it enables more people to access the financial markets. Mutual funds, Forex currencies, ETFs, options, futures, bonds, and stocks can all be traded online nowadays. However, it is important to understand that online trading, DAT, is very different from traditional trading. It also requires very different practices. This is why Online Trading Academy reviews the pros and cons of engaging in DAT, so that more people can make an informed decision in terms of whether or not to engage in it.
Comparing DAT to Traditional Trading
Traditionally, a broker would work with clients over the phone or other methods. They would help throughout the entire trading process. They were also experts who helped make trading decisions. They were paid by commission, often charging very high percentages. The process is slow and a single trade would take hours to complete. This is why long term investors are the most interested in this.
Online trades, meanwhile, simply require a piece of software, which an online broker can provide. Through this platform, traders can access news, market data, alerts, and charts. This is perfect for day traders, who gain a certain level of market assets. The trader makes all the decisions and each trade is executed almost in real time. Brokers still charge a commission, but this is much lower and usually only entails a subscription to their software package.
Online Trading Academy Reviews the Pros of Online Trading
Trading online means that the process is completely automated. It is independent of the broker, which means people can make their own decisions and be more informed about what they are doing. The platforms also provide them a range of tools and strategies. Trading online means being in control of your own portfolio. You can trade a range of products on lots of different markets. The data provided is real time and all trades are executed very quickly. Put together, this means online trading is perfect for short term traders, such as the swing traders and the day traders.
There are other benefits, including:
- Low commission rates.
- Trading on margin comes with high leverage.
- Opening an account and managing it is very easy.
- There are no limits tied to geography.
Clearly, active traders, who want to trade frequently and quickly, benefit from these types of systems.
Online Trading Academy Reviews the Cons of Online Trading
There are disadvantages as well, including:
- The broker gets to determine what the account minimums and activities are.
- The trade risks are quite high, particularly because most trades are margin trades.
- You have to pay monthly to use the software.
- The platform can fail, which could result in significant financial losses.
- You must rely on a fast internet connection.
- You are fully responsible for all decisions and get very little help.
- You may be charged an inactivity fee.
Whether or not you should trade online is all down to your personal preferences. Being aware of the pros and cons will give you a greater opportunity to make an informed decision.