The Importance Of Online Futures Trading

by David Jenyns on July 19, 2011

Thanks to broadband internet penetration, online trading of equities and commodities is now possible for anybody having a computer. The advantages of online futures trading are so many that it is not surprising it is now becoming the preferred method of trading for many traders.

Some of these advantages are:

a)The sheer convenience of this kind of trading in terms of the information you can find about your current futures positions, cash and margin you need to make further trades that you can find on screen with a click of the mouse is simply too good to ignore.

b) The pace at which futures trades happen is a well known fact. You need to be able to get in and out of positions quickly to lock profits and therefore the preference that online futures trading orders get over the telephonic ones makes it a clear winner.

c) The commission structure is a very competitive one as brokerages do not have to tie up or use their resources to execute trades. That is beneficial for you as the trader and you can execute many quick trades without worrying about the commissions.

d) You have total control over your trades as you are the only one who is placing the orders. You are thus solely responsible for the outcome of your trading positions.

e) There is no chance of any miscommunication between you and your broker here as you are the one placing orders. In a telephonic conversation, there are chances that your broker can mishear or misinterpret what you are saying and that could lead to some problems.

So what are the requirements of online trading you should have with you?

The hardware is the first element. You should have a good computer and though you may not require anything too fancy, you must ensure that basic memory and RAM capacities are more than adequate to help you execute trades without interruption. You should be able to get the right configuration from your broker and other traders.

Internet accessibility is a very crucial element. Whether it is a dial up modem facility or broadband, continuity and uninterruptable service is a must. It can be very disheartening and even disastrous for you should your internet connection let you down just when you wish to place a stop loss or exit a trade. By the time you recover the connection or make alternate arrangements, the market may have moved so much that you can end up making a big loss.

Finally, a good trading platform or software from a reputed broker is required. You can in most cases download the software from the site of the broker and get going following instructions. Many brokers do help out with demos to get you accustomed as well.

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