Online Trading Platforms versus Stock Exchanges

Online Trading Platforms versus Stock Exchanges

The stock exchange market is one of the most liquid markets in today’s economic dispensation.Trading in shares on these markets is one of the most important activities in both the national and global economy. This is because it is one of the most effective ways through which companies can raise large amounts of capital with minimum liability. It also gives traders the chance to own a piece of these companies, and hence the possibility of earning profits.
For traders, they can decide to use one or both of the available channels to trade in stocks. These are online trading platforms and stock exchanges.  In the following paragraphs, the similarities and differences between the two have been expounded in order to arm traders with relevant information on which method to choose.
Charging of Commissions
On this front, the two methods are inherently quite similar. This is because in the traditional stock exchange, the stock brokers will always charge a commission on each and every stock that is traded through them.
The same is true for online trading platforms as well. This is because the online brokers will also charge a commission on the traded stocks. Sometimes this is hidden in the costs. Despite what is usually said, they do not necessarily charge a lower rate than the stock exchanges. These rates vary from one online broker to another and sometimes may be higher than those in traditional stock exchanges.
Capital Gains Tax
Governments usually levy a stamp duty in form of a capital gains tax on any stock that is traded on the stock market.
This means that regardless of the platform, be it stock exchanges or online platforms, the trading of shares will attract this tax.
Level of Competence Required of Traders
Although there is no minimum requirement in terms of trading experience that is needed for traders to participate in any of these markets, it should be a guiding factor in choosing which platform to use.
For greenhorn investors, stock exchanges would be a good idea to start with since the advice of stock brokers as well as their experience will make them more adept at judging markets, and hence enable the investors make the best move.
For more experienced traders, getting into online platforms in addition to the stock exchange would be a good way of diversifying the places they invest their cash or sell their shares.
Availability and Accessibility
The online trading platforms are easily accessible to traders as all they require is a computer and an internet connection. It is also possible to move from one platform to another by just opening a new tab.
On the other hand, one would need to physically move to the stock exchanges, thus costing more in terms of time, energy and money.
Volumes of shares being traded
The two platforms trade relatively the same number of shares in the same region. However, online platforms may offer the traders more variety since there are several of them, each of which offer a wide variety and volume of shares.

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