Trading stocks online has many advantages and disadvantages compared other financial products.

Some advantages of trading stocks online are:

  1. Offers an additional source of income to traders and investors
  2. Offers freedom to trade anywhere around the world where there is an internet connection
  3. May offer a passive income stream if your stock pays dividends
  4. Lower capital (margin) required.  You can often get started buying 1 stock
  5. Profits taxed at a lower rate than reguar income

Some disadvantages of trading stocks online:

  1. Many products to choose from (there are 1000s of stocks) which is often overwhelming to new traders
  2. Leverage (the amount of money your broker will lend you) is often lower than forex or futures
  3. Low liquidity for many stocks causing increased transaction costs and unpredictable price action
  4. Price can be manipulated by large banks or high frequency trading firms

 

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