Online Trading Vs. Offline Trading: What’s Better?
“Okay, Google, I am a beginner in the market. What should I choose between online trading vs. offline trading?”. Google knows. We know it too.
Online trading involves the use of computers and smartphones connected to the internet in order to carry out trades through web-based brokerage firms and platforms. Offline trading, on the other hand, involves using the services of a broker. The broker is a licensed professional who trades on behalf of the client.
Offline trading used to be the most popular and preferred mode of trading. However, with the increased proliferation of the internet and the availability of devices that can access the web, online trading has trumped it in terms of dominance. Nonetheless, the former still exists.
In summary, online trading resulted from the digitization of offline trading.
Main Difference Between Online And Offline Trading
Reviewing the two categories of trading involves analyzing the characteristics of each of them. Notably, the analysis emanates from the differences between the two types. This is highlighted below.
|No.||Online Trading||Offline Trading|
|1.||Involves buying and selling securities and assets through a web-based broker, using the internet||Involves buying and selling securities and assets through a brick-and-mortar broker (broker’s physical office).|
|2.||Everything is in one place. This means that online brokers enable trading and also provide research tools.||A trader first has to carry out separate research before selecting a broker to facilitate trading.|
|3.||Online brokerage firms charge less commissions and fees.||Offline brokerage firms charge relatively high commissions and fees.|
Table 1: Differences between Online Trading and Offline Trading
Advantages of Online Trading
- Online trading is convenient since it is available on any device that can access the internet. This also makes trading easy.
- A trader using an online brokerage firm saves money. This is because online brokers charge less fees since the maintenance costs for their websites are relatively lower compared to the cost of renting and hiring professional staff in offices for offline brokers.
- A trader accesses everything on one single platform, that is, buying, selling, research, profile and portfolio management, and withdrawal and transfer of money. This is not the case with offline brokers since these functions are the mandate of different departments. Furthermore, the traders carry out research on their own prior to choosing a broker who facilitates trade.
- Online trading enables traders to access real-time information about changes in the price of stocks, currencies, or other financial instruments. These timely updates promote effective portfolio management. Offline trading, on the other hand, has limited information and that which is available is often relayed later than expected. It is, therefore, impossible for a client to keep track of market movement.
- Online brokerage firms have secure platforms and features which prevent fraud. The existence of password protection features protects transactions. In offline trading, a trader’s cash is at the mercy of someone else who can make mistakes leading to losses.
- Online platforms enable their clients to access assistance quickly. In offline trading, this is often a slow process since traders are required to present themselves physically to an office to get help.
Conclusion For Online Vs. Offline Trading
From the analysis above, online trading is superior to offline trading. It is convenient, easy to use, accessible, and cheaper, among other beneficial features. Moreover, online trading has enhanced security which protects the client’s money against losses. Furthermore, online brokerage firms provide these features for free to their customers. In the online trading vs offline trading debate, the former is the better option.
Brokers that provide online trading charge smaller fees. Hence, it is better for your trading budget. Moreover, there is an opportunity to trade anytime, anywhere.
First, you should set the goals for trading and make a strategy. Next, plan your capital. After this, you have to find a reputable broker, create an account and make your first deposit. Your further actions are making deals according to your strategy.