Online trading platforms and stock exchanges
The stock exchange market is one of the most liquid markets in today’s economic environment. Trading on these markets is one of the most important activities nationally and globally as it is an effective way in which companies can increase capital with minimum loss. It also gives traders the opportunity to earn profits.
Traders can choose to use one or both of the available channels to trade in stocks. These are online trading platforms and stock exchanges.
The similarities and differences between online trading platforms and stock exchanges are outlined below:
Charging of commission
The two methods have similarities because stock exchanges always charge a commission on every stock traded through them.
The same is true for online trading platforms because online brokers will also charge a commission on the traded stocks. Sometimes this is hidden in the costs, but in spite of what is usually said, they may not charge a lower rate than the stock exchanges. These rates vary from one online broker to another and sometimes may be higher than those in traditional stock exchanges.
Capital gains tax
Governments usually impose a stamp duty in form of a capital gains tax on any stock that is traded on the stock market.
Regardless of the platform, whether it is stock exchanges or online platforms, the trading of shares will attract this tax.
Level of competence required
Although there is no minimum requirement regarding trading experience needed to trade in any of these markets, it should be a guide in deciding which platform to use.
For beginners, it is a good idea to start with stock exchanges since the advice and experience of stockbrokers will make them more able to judge markets and make the right move.
For more experienced traders, getting into online platforms and the stock exchange is a good way of diversifying the places they invest their cash or sell their shares.
Availability and accessibility
Online trading platforms are easily accessible as all you need is a computer and an internet connection. You can also move from one platform to another by just opening a new tab.
On the other hand, you would need to physically transfer to the stock exchanges, which would cost more in terms of time, energy and money.
Volume of shares traded
The two platforms trade essentially the same number of shares in the same region. However, online platforms offer traders more variety since there are many which offer a wide variety and volume of shares.