Online Trading - Fallible Technology
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(pg. 1)
With online trading become very popular due to its ease and speed, investors should not lose sight of technological problems that could arise resulting in trading online.
Here are some tips that you should be mindful of when looking to trade online:
- Since online trading still involves the use of a brokerage firm to process your order, choosing the right brokerage firm is important. Look for publications which rate the various brokerage firms based on customer satisfaction and speed of order execution.
- Before you starting making online trading orders, get to know your software. Learning all the functions of your software tools will enable you to execute limit orders and to cancel orders that you make by mistake.
- When placing an order, bear in mind that your order could be delayed resulting in your not getting an order placed. Furthermore, in a heavily traded day you might not get the price you want because of the number of orders that are being executed at the same time.
- Technological glitches could cause your server to go down with the result that while the market is continuing to trade, your connection has been severed. If you are not aware of this, you might not know what the market is doing as it relates to your investment.
- In a fast moving market, you should never place market orders. A market order is one in which you buy or sell a stock at whatever price the market is ordering. In a fast moving market, this could result in your buying or selling a stock at a price which you did not expect or want. Always specify the price you want to sell or buy. When you specify a selling price you can only be filled at your selling price or higher. Similarly, when you specify a buying price, you can only get filled at your buying price or lower. Your order might not get filled at all in a fast moving market but at least you know what your order might fill at.
- You can also place limit orders at which your stock is automatically sold or bought in the event you are away from your computer and are worried about what the market is doing.
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