Online Trading: A Better Way to Tackle the Markets

Trading is an act of buying or selling a financial instrument for making profits through proper risk management, psychology, and game plan. Previously to trade the markets, traders had to visit an exchange or call their respective brokerage. However, now with the presence of the internet at all corners of the globe, investors can access the market from the comfort of their homes. 

Online trading is not a challenging task to accomplish. Almost all types of financial instruments are available to trade with brokers. These companies establish a link between traders and an exchange. When a market participant places an order, it goes through the brokerage who carries it out on the respective exchange. The whole process takes only a few milliseconds, thanks to the advancements in the fintech industry.

Is online trading available everywhere?

As mentioned before, a proper internet connection is necessary for online trading. It is also essential to use appropriate hardware that can support your trading platform. There might be trouble waiting for you if the software crashes while you are trading due to low system specifications.

Access to Instruments

Traders have access to many instruments via online trading. They can access them all under one platform if the broker supports them. It is possible to trade stocks, forex, futures, indices, etc., with a single click from anywhere in Saudi Arabia.

Strategy Application

Online trading provides an opportunity to implement tons of trading strategies. A good example would be the use of algorithms to trade the markets. These expert advisors implement your game plan on auto mode and trades according to the coded information. HFT or high frequency trading systems would not have been surfaced if there were no advancements in the internet and fintech.

Accounts

There are also a variety of options available to traders in terms of account types. Standard, ECN, and micro portfolios are a few examples. They can differ in terms of spread, execution speed, and risk appetite.

Scalpers are a recent class of traders who utilize online trading to quickly get in and out of the markets. They use the ECN models that have the lowest spreads with quick execution speeds.

Regulation in Online Trading

Online trading is subjected to a good amount of regulation to ensure that the investors’ capital remains safe.  A few good regulators in the market are:

  • The United Kingdom. Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
  • Saudi Arabia. The Saudi Arabian Central Bank (SACB)
  • Australian Securities and Investment Commission (ASIC)
  • Cyprus Securities and Exchange Commission (CySEC)

A suitable check and balance make online trading a safe haven for most investors.

Mobile Trading

Mobile analysis is a new way to take benefit from the revolution in online trading. Investors in Saudi Arabia can make their predictions on the market and open and close their positions similar to a desktop platform.

Volume

As more investors have the option to access online trading, the trading volume increases. This adds to the market liquidity, which is the bread and butter for many investors.

With a good amount of liquidity, traders can enter and exit positions with bigger lot sizes easily. A reduced slippage can be helpful for scalpers, HFT, day and swing traders alike.

How can you choose a good online trading software?

Good online trading software provides adequate tools for charting. It has a comprehensive option of orders such as stops, limits, market, etc., that traders can choose according to their style. Nowadays, such platforms are developed by third-party software companies or the brokers themselves. Using a demo account is beneficial to judge how the application will work before opening a live portfolio.

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Steve has been living in Saudi Arabia since 2013 and writing about Saudi rules, regulations, guides, and procedures since then.