Hello,
As the global economy has become revolutionized by deregulation and
the spread of the internet, many investors have regarded online
commodity trading as being godsend while others regard it as being a
nightmare. There are many advantages and disadvantages to consider when
opting for online commodity trading.
Generally with
online commodity trading, a trader will be able to execute trades much
faster than is possible through a traditional broker. In addition,
commission charges are much lower with online commodity trading than
trading through the traditional offline or full-service broker, as the
overhead maintenance for an online brokerage is much lower than a
full-service broker’s office.
Another reason why
commission charges are much lower is because with online commodity
trading, most of the profit made by the online broker is through volume
of trade. Since the speed of execution of trades is much greater
through an online broker, this allows for a greater volume of trades to
be executed. This also allows the trader to have a wider range of
products and trading options where he can be profitable on his trading.
Online commodity trading is like a one-stop resource
centre. A trader will have virtually everything he needs when he logs
into his online trading account. He will have access to real time
quotes, various technical tools and software to help him decide what is
the best market position to be in when he is carrying out his trading
activities.
Nevertheless, with online commodity trading,
a trader is basically acting on his own. He will have no mentor or
actual advisor who will watch over his trading activities. With this
lack of guidance, it is only natural to expect that many traders will
be prone to repeating the same mistakes which eventually cost them
their “risk capital.” Having a mentor is crucial for traders who want
to improve their trading proficiency.
Another
disadvantage of online commodity trading is “overtrading”. Encouraged
by the low commission and the lack of guidance from a mentor, a trader
can easily find himself overtrading. There is a tendency for a trader
to deviate from his original trading strategy and switch to day trading
after he gets bored with holding a market position for a considerable
period of time. When this happens, it will be akin to gambling in a
casino.
Without discipline, online commodity trading can
burn a hole in your pocket. On the other hand, for those who adhere
strictly to their trading strategies, online commodity trading can be a
lucrative venture.
thanks!!
_________________
online commodity trading