A Background to Online Trading – How it Began

Online trading has become one of the most popular ways to integrate financial ability and intelligence into the market in one of the most convenient and accessible vehicles for investing ever produced.

It is true that the digital age has indeed made our lives so much faster, and companies such as Weiss Finance have truly capitalized on the new forms of trading to provide one of the most stable and comprehensive platforms for budding and seasoned traders alike to make their trading dreams come true.

 The History of Online Trading

What people started off calling “investing online” soon came to be known as “online trading”. It is simply a process within which traders and investors will purchase and sell various securities through an electronic network, generally through a brokerage firm which has provided an online platform.

This innovative kind of trading and investing quickly became the accepted means for trade towards the end of the millennium in the late 90s. Today, there are many brokerage firms that offer online trading platforms.

Before online trading became a thing, obviously people were limited to placing orders through a relevant stockbroker. This would generally be accomplished by calling an office, or meeting with a stockbroker in person.

The relevant brokerage firm would then enter your order into their system, which was connected to exchanges and trading floors. It was only in 1985 that Trade*Plus began offering a retail trading platform through Compuserve and America Online.

In the beginning of the 90s, one of the founders of Trade*Plus initialized a new subsidiary company known as E*Trade Securities, Inc. By August 1994, investing online was now starting to see a lot of growth and development.

Some Real Developments

 It was in 1994 that K. Aufhauser & Company, Inc. finally provided a medium advanced enough to permit the first form of online trading which was known as “WealthWEB”. Such an investment allowed for the proper development of online trading towards our modern understandings of internet-based market activity.

Then there was also they nifty electronic communication network, which allowed the direct trading between investors.

Investors and traders could suddenly bypass the middleman and skip the whole process involving contacting the stock broker. You could now just punch in your order using the internet. That is not to say, however that brokers were completely cut out – far from it. You still had to go through the right channels in order for your transactions to be approved.

The Price of Freedom

Obviously the market would get out of hand if things were not being regulated by the proper authorities – and an economic cataclysm could easily result from the wanton mismanagement of stock trading through a medium as infinitely accessible as the internet could easily lead to chaos if people were left to their own devices.

Stockbrokers still need to protect their good name, and have a duty to regulate the market, making sure that unlawful activity does not permeate  into the civil and decent proceedings of standard market activity.

Knowing how volatile the more unsavory forces of the internet can be, the powers that be in the market and online trading development began implementing security software and measures in general that would ensure that nefarious hackers and the like could never break into linking servers.

Different Names, Same Processes

In the United States, online brokers are known as discount brokers. In Asia and Europe, an online broker is known as a high-net-worth individual. Such a high level of popularity can be linked to the quick and simple nature of online order fulfilling.

Then there are also the far cheaper rates seen with online trading, as opposed to those witnessed with real life brokers. Such affordable rates will obviously influence more people to go for the online choice.

Within the United States, you will generally need to have a fair amount of capital put aside in order to deal with the various firms and their fees. Obviously the more notable and established firms will charge even higher rates.

With such sophisticated digital tools available to the common person, one could almost say that physical firms and their agents are now no longer as needed as they were in the 20th century.