Online trading started out as an experiment and soon became fad mainly due to one reason: it was cheap.
"Because of the way brokerage firms charge for stock trades, it's difficult to compare prices precisely. Internet brokers usually charge flat rates, often for transactions up to 1,000 shares, with additional fees for larger or more complicated orders. Traditional brokers, by contrast, levy fees based on how much stock an investor wants to buy or sell, and how much the stock is trading for at the time. But, even factoring in the discounts many big brokerage firms reserve for their best customers, online brokers charge commissions anywhere from half to one-tenth, or even one-twentieth, the cost of their full-service counterparts." (www.investing.wsj.com/stocks)
Another reason for the increase in onine trading is more trusted brokers online. By this we mean to say that traditional brokers push underwritten or non-selling stocks rather than finding the right stock for the investor.
But pitfalls do exist.Online trading right now is primarily for do-it-yourself type of investors.
For those of you who are unaware of the technicalities involved or are a bit scared about investing your money in areas you are not too sure of online trading should be avoided without proper guidance and knowhow.
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