Over the recent years, online trading has gain immense popularity in Malaysia. It started with securities and equities trading with the local banks. Now, Bursa Malaysia has also opened its doors for individuals to trade derivatives such as futures and options via the internet.
Currently with the online platform, not only do traders and investors have access to Bursa Malaysia’s derivatives but also being able to trade offshore derivatives in Chicago Mercantile Exchange, which has the largest options and futures contracts open interest of any futures exchange in the world, since the announcement of partnership between Bursa Derivatives Bhd the CME Group Inc in September 2009.
Now, there is a choice for individual traders and investors to trade derivatives and commodities on their own or to go through their brokers.
There are a few advantages and disadvantages of online trading.
Cheaper Commission Rates
Since there is no middle person involved, there are no additional fees for the services for the brokers. You will only need to commit to a minimal amount of commission fees from using the online trading software.
Trading online will allow for instant access since you are the one that is going to place the order yourself. With that, you are able to act of price movement immediately and take advantage of the volatility of the market, which is especially important in the derivatives and commodities market.
While trading online does gives you the convenience there are also setbacks and disadvantages of trading online.
No Expertise Opinion
Trading yourself will also mean that you will only solely rely on your own judgment of the markets, of which you are more bound to make errors. Having an experienced broker will give you the confidence since the job of the broker is to study and be close to the market as well as on-going news that will affect the market.
No Exit Plan
Another disadvantage is that no one is going to tell you to exit your position either to close for profits or to cut loss. As humans, sometimes we may trade according to emotions and that can distort judgments and the rationality of investing, regardless the strategies. Having a broker will help reduce or eliminate emotional trading.
On whether you should be trading online depends on your level of experience. It also depends on the support of the broker. Some brokerage firms offer added services for clients such as training classes so that traders may get confident and comfortable trading online.
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Source by Sheim Quah
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