Nowadays, online trading has become a preferred method for many investors. From casual, at-home investors to more seasoned investors, online trading provides an accessible and efficient platform for securities trading.
While online trading has grown in popularity, there are still some common misconceptions about it. You may have heard someone telling you that online trading is not secure or that you don’t have access to actionable investment advice with these platforms.
This is untrue.
We’ll take a look at 4 common myths surrounding online trading and set the record straight.
Online Trading Myths
- Online trades don’t go through brokerage firms
- This is a pretty common misconception. Just because you don’t deal with a broker-dealer directly when making investments using online trading platforms, does not mean that you are not trading through a firm. As an individual investor, you do not have direct access to the securities market. All online trades are still facilitated through a brokerage firm.
- Online trade platforms do not feature live support
- No matter what trading platform you use, you are always entitled to live support and advice. Most online trade centers feature a toll-free number or other point-of-contact if you’ve made an incorrect trade or need other investment information.
- Online trade transactions occur immediately
- While online platforms facilitate turnarounds on trades it does not mean that transactions take immediate effect. Investments may still have a price or time limit attached to them, or you may be trading in high volumes, which can result in delayed transaction times. Other things, like your internet connection or browser speed may affect transaction times.
- Online trading is safer than in-person trading
- You may think that broker-dealers are just out to take your money. This leads to the misconception that trading online is safe, because it cuts out the broker-dealer role. However, you can be your own biggest investment risk. Investors need to take careful consideration of their investment goals and trading limits before setting up an online account.
Investor Resources
You can find out more about online trading myths and other common misconceptions about securities trading on FINRA’s website.
Contact us if you have more questions about online investing or protecting your investments.