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What is Online Trading?


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Online trading has given anyone who has a computer, enough money to open an account and a reasonably good financial history the ability to invest in the market. You don't have to have a personal broker or a disposable fortune to do it, and most analysts agree that average people trading stock is no longer a sign of impending doom. Online trading is trading in financial markets via the Internet. Previously, all trading was held in the exchange building in person or by phone. Now, every deal is concluded with the help of an electronic terminal. 

How does online trading work?
Internet-trading allows you to make deals on the financial market within seconds or even less. However, one thing still remains the same with pre-online times: a private trader still needs a broker in order to trade. A broker provides a trader with a trading terminal –  the software that a trader uses to conduct his business.

It goes like this:

A trader decides to make a deal (for example, to purchase 100 shares of Apple).

He finds this asset (Apples' shares) in his trading platform, chooses the quantity (100 pieces or 1 lot) and places an order to buy.

The broker gets a request from a trader and starts executing the order. He needs to find a counterparty – another trader, who is willing to buy the same asset for the same price. 

The broker looks for a counterparty on the stock exchange. When the search is completed, the deal is made.

Nowadays, the trading platform does all the work to find a counterparty and clinch a deal. The trading process is fully automatic; that is why the time needed to make a deal is no more than a couple of seconds. 

But it wasn’t always like this. In the early days, the whole process took a lot of time even though the chain “trader – broker – stock exchange – broker – trader” was the same. The trader used to give a call to his broker and ask to open the deal, and the broker would personally try to find a counterparty on the stock exchange. 

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