Online Trading has been a substantial growth area across the retail investor landscape for 15 years. The major growth and traction came, from my own recollection, during the dot-com boom in the late 1990’s through to early 2000. New technology (remember when the internet at home was your phone line!) and the overall boom in the markets, especially the technology laden Nasdaq prompted millions of new traders to join the party. What’s more, online trading has stood the test of time, with more and more retail volume going through the market via online portals.
Little has changed, but many things are different!
One of the biggest changes over that 15 year window, and continues to be, is the nature of the instrument that investors have traded. Back in the 1990s, it was stock only positions.
With fast moving markets, investors would day trade stocks, or perhaps take “a long term view” and hold them for a week or two! There were also company options too – especially here in the Australian market. Often, out of favour mining stocks that were looking to move into the highly fashionable dot-com space issued options to raise some cash. At the time, my colleagues and I made an absolute killing with stocks such as Sirrocco Resources and Nexus. Happy Days!
Then came the warrants market, offering investors the opportunity for leverage, and the issuers bigger fees, a segment that grew through both trading and investing styled warrants, before declining, as the Options market gained an increasing level of popularity through a variety of promoters.
Then came CFDs – bringing dizzy levels of leverage and along with that, some genuine horror stories, as a myriad of providers came and went.
All of these instruments were traded online
Developments in technology continued to support the evolution of trading instruments, with more tools being available to the retail client. Free data, charting analysis and scanning tools all have supported the ongoing growth and popularity of online trading.
One of the biggest beneficiaries of this has been the client, as transaction fees have got progressively cheaper. Back in my early days here in Australia, trading the SPI was $35 a side – imagine that now!! For stock transactions, through our online portal, we currently charge just $30 for Australian stock and even less – $12.50 for US stocks – considerably cheaper than our competitors.
Saving money sounds good!
It is often said that a saving is as good as a profit, and so being more cost effective is clearly a benefit to the consumer. However, along with placing your own trades brings with it, some level of risk – what is known as Execution Risk.
All too often, especially when starting out, it is easy to make a mistake. Hitting buy instead of sell, entering the wrong quantity or price can, not only be frustrating, but also very expensive. What’s more, when this sort of mistake happens – as it probably has to most traders – it can really dent your confidence.
How can you save money and avoid execution risk?
For some time now, we have spent time working with our clients, discussing the kinds of trading tools that they would like. Most love the benefits of online trading – especially how cost effective it can be – very handy if you are trading frequently. What’s more, most platforms now also provide access to multiple markets and instruments, all in one spot, providing a great opportunity for diversification and flexibility in trading.
However, one of the downsides of trading platforms and the greater level of tools and functions is that they have become a lot more complex. Add in the leverage provided by many trading instruments and mistakes can be quite costly.
In response to this feedback, we have developed our revolutionary AIE Trade Me service – delivering clients the lowest possible levels of brokerage and removing all of the execution risk. Check this out and you will see how easy it can be to trade with confidence and zero execution risk.
Has much changed in Online Trading?
Very clearly yes as this provides execution risk free service at extremely low costs.