Buying and selling stock on the internet is commonly called online trading or automated trading. It is when the buying and selling of stock from the stock exchange takes place on the computer. This is an alternative to the traditional way of buying and selling stock through the securities markets. Technologically inclined people save millions of dollars using online trading rather then a broker.
Automated buying and selling on the stock exchange has had a great impact on society, improving the stock market system. Using a stock broker to buy and sell stock on the stock exchange has always been the traditional way, but when the automated stock exchange came about, it became the preferred method of trading stock. Using a broker (a human being) always had it’s flaws. This broker may not trade stock as fast as required, they could make simple mistakes and they could also lose your money rather then building it up. Automated trading on the stock exchange is the more preferred choice now as it has many advantages as opposed to using a broker. Trading can be done at home on the internet rather then going out. It is faster and altogether more efficient. The effect it has had on society is that it has improved the stock exchange and reduced the effort people have to make, to invest money. Trading on the stock exchange is now very much easier through the use of automated trading.
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Nowadays, customers are selling stocks, checking mutual funds and overseeing markets all over the Internet. Investors log on during the morning and again throughout the day just to keep track of shares and look for potential bargain buys. The Internet has facilitated so many transactions in the stock exchange so that at the moment, more and more exchanges are being done on the net.
Anybody can buy shares on the Internet provided that he has a credit card. The investor contacts an online brokerage firm and gives the shares he wants to buy. He then gives his credit card number and the deal is made. Online trade is gradually becoming very famous and the booming industry of online brokerage is expected to grow to $3 trillion by 2003. People however are still quite reluctant about giving their credit card number online and tight security systems should be available.
To start online trading, you need to have a Personal Computer (PC) a Pentium or better which has access to the internet. It then requires you to use a internet browser that supports Java, JavaScript, cookies, and Secure Sockets Layer protocol (SSL). The browser must also be able to support a secure connection for high-grade encryption (128-bit). If you connect to the Internet through a proxy server or firewall, these must also support SSL for high-grade 128-bit encryption. You then need to apply to an online trader which is basically your broker and you can start to buy and sell your stocks from there on.
The advantages of online trading are:
It takes little time to access data and can even view the latest stock quotes that are delayed by only a few minutes- because the internet is very fast and updated, customers can get their information quickly and conveniently at home or their computers.
It provides the convenience of trading from the desktop computer whenever people feel the need to- so when you see a good price to buy or sell a stock, you can do it straight from your home without having to go out or ring up a broker.
It allows traders to discuss over and read through potential investments at their own pace- information about trades and stocks are on the trader’s webpage’s or an official stock market websites, which you can read through them again and again so you can understand it better. Some sites give information and stock quotes to only paid subscribers whereas others offer the same material for free. Many brokerage firms have their own homepages so that people can electronically place their orders for buying and selling shares. Moreover, some Web sites also allow investors to buy shares directly, so that they do not have to pass through brokers and hence save that paying fee. This is heaps more convenient than having to go and talk to a broker your self.
It is cheaper to trade online as online brokerages are less expensive- some brokers charge you to make a transaction of buying and selling stocks, but online brokerages are less expensive so you a lot of cash in the long term.
Online trading offers after-hours trading so that orders can be placed for the next day- don’t you hate it when you want to go to the shop or a supermarket to buy dinner or something and then when you get there, you realize it’s closed. Well buying and selling stocks is just like that, but when automated trading was invented, it offers after hours trading so that orders can be taken any time and then placed in when it opens again.
The disadvantages are:
Servers can crash, just like out PC, servers can crash and cause massive delay in online trading.
Your Internet services can be shut down or stopped working- your internet services providers may have outages, so if you don’t have the net, you can’t online trade.
Clever hackers can intercept the transactions, hackers can do anything- and they can blow your computer, send u virus or a Trojan and even have access to your transactions to your online trading which can spend YOUR money which you didn’t buy.
In certain sites, there are almost no customer services from online brokerage- if you are a new person to online trading and you don’t know what to do. Well some online traders don’t support any customer’s services so you wouldn’t get much help from them.
Information’s and data’s of share maybe inaccurate- computers are generally more accurate than human beings, but, nothing is perfect in this world and computers won’t probably be perfect either. So computers can make mistake and can make people lost a lot of money by just making a simple error that humans can pick up.
So, does automated buying and selling on the stock exchange really have a great impact in our society? It has some advantages and disadvantages, people can earn lots of money using online trading, but some others can go bankrupt. In history there have been some major outcomes when it comes to buying and selling stocks, in 1939, the crash of Wall Street cause many people to lose millions and millions of money and causing them to go bankrupt. Some people even committed suicide because of that, so online trading can cause us more harm than good, but for some people, it can cause more good than harm.
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