What is Internet Trading

As the name suggests, Internet Trading in financial markets is a process of trading contracts using specialized software operating over the Internet. This method is becoming increasingly popular. The majority of trading venues are moving away from the traditional mode of «floor» or «pit» trading (when a trader is required to be «physically» present at a stock exchange or operate through a broker who is present there) towards electronic trading. This development means that anyone is able to buy this or that asset traded on a stock exchange directly from their trading terminal by giving instructions over the Internet.

Founded in 1971, the NASDAQ was the first index on the globe to begin making transactions through electronic trading. The biggest NYSE stock exchange took 35 years more to automate trades; now, as the process of automation is coming to an end, trading on the floor is on the decline, and increasing numbers of investment companies prefer electronic trading.

At the same time, many traders and brokers operating on the floor are finding that they are excluded from the trading process altogether. Traders analyze the market and buy and sell the assets they are interested in independently of the services of brokers.

There are several strong advantages to electronic trading: low transaction costs, excellent liquidity, and transparency of transactions and low spreads. Electronic trading is clearly a new and revolutionary development in investment; it is a new, dynamically developing trend which is set to shape the future of trading financial instruments.