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What Is The Difference Between E-Trading & Conventional Trading?

Should you choose one over the other?

 

The most popular way for people to trade stocks used to be through a remisier. One would have to place a phone call to our remisier in order to place a buy or sell order on the stocks that we would like to trade.

However, that is no longer the case today. Most modern traders prefer to do their trading online via an e-trading account instead. Although it is still possible to place a buy or sell order through a remisier today, most people would rather do it themselves through an e-trading account.

The conventional way of placing orders through a remisier has become a thing of the past while e-trading is starting to become the norm.

Read Also: What Is A Diversified Investment Portfolio?

What Is A Stock Trade?

For those new to investing in the stock market, a stock trade is where an individual buys or sells shares of a public listed company. Today, that can be done either by placing a buy or sell order through a phone call with your remisier or with a click of a button on your e-trading account.

How Does Conventional Trading Work?

The conventional way of placing a buy or sell order is to call up your remisier and tell them which stock you would like to buy or sell. Your remisier would then proceed to execute the order for you. All phone conversations between you and your remisier would be recorded as proof of the buy or sell order that you’ve given them.

Read Also: What Is A CDS Account?

How Does E-Trading Work?

With e-trading, there is no need for a remisier. Stock brokerage firms nowadays offer e-trading platforms of their own where their customers can look at charts and stock stickers and place buy and sell orders with a click of a button.

Why Conventional Trading?

With the convenience of managing your trades online with a click of a button, it might seem pointless to have a remisier and trade stocks the conventional way anymore. However, there are still some benefits of trading stocks the conventional way.

  1. Advise From Brokers: A remisier can advise you on market trends and which stocks to buy or sell if you’re too lazy to do extensive research.
  2. Partial Monitoring Of Portfolio From Brokers: Most of the time, your remisiers would also help you keep an eye on your portfolio and remind you when certain decisions needs to be made or when new opportunities come along.

Why Not Conventional Trading?

Despite these benefits, most younger folk would still prefer to trade online over doing it the conventional way.

  1. Higher Transaction Charges: Placing your orders through a remisier usually comes with higher transaction charges as you would need to set aside a portion of the trade as commission or management fees to your remisiers.
  2. Comparatively Slower: The process of placing your trades through a remisier is relatively slower compared to e-trading as you will have to communicate your orders to your remisiers through the phone.

Why E-Trading?

Most young traders prefer the convenience and greater control they would have over their portfolio with e-trading.

  1. Lower Transaction Charges: E-trading usually comes with lower transaction charges as everything is done by the customer themselves on their e-trading accounts. Hence, there is no need of brokerage firms to hire dedicated remisiers to service customers and handle orders, thus reducing costs.
  2. You Control Everything Yourself: Customers can place buy orders, sell orders, stop-loss mechanisms as well as perform stock analysis all from their e-trading dashboard. Almost everything can be controlled by you with a click of a button.
  3. More Convenient: You can access your e-trading portal anytime and anywhere to perform the transactions.

Why Not E-Trading?

From the looks of it, e-trading sounds like the perfect way to trade. However, there exists some down sides to trading stocks online.

If you are new to the game and are clueless as to what to do or how to begin, there would not be a trusted remisier to look out for you. You will have to do your own research and pick up the skills on your own through various online resources. That shouldn’t be a problem for the young and tech-savvy generation, but it might pose a challenge to the older generation who aren’t as computer savvy.

Which Should You Choose?

In the end, the choice is up to you.

If you are a tech-savvy and well-informed investor, e-trading would probably be the trading medium of choice as it allows you to make quick and well-informed trades with just a click of a button and save some money on transaction charges at the same time.

However, if you are the kind who prefers having someone to talk to and keep an eye on your portfolio, then trading the conventional way might be best for you.

Read Also: How And When Should I Start Investing?

DollarsandSense is a website that aims to help people make better financial decisions, one interesting bite-sized article at a time. Like us on Facebook to stay in touch with our latest article. 

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DollarsAndSense Malaysia is a website that aims to help people make better financial decisions, one interesting, bite-sized article at a time. Like us on Facebook to stay in touch with our latest articles.