Online stock trading has revolutionized trading in the late 90’s. Many people are still not aware of the tremendous advantages it offers, especially for the active trader.

Imagine being able to place an order with the push of one button and to get executed instantly.

This is what online stock trading is all about.

The traditional way to route orders was to call your broker, who would then send your order to his person on the exchange floor or to the market maker to actually execute your order. After that is done the whole process reverses in order confirm what happened with your order. If you are lucky this process will only take a few minutes, but in many cases it takes much longer. For some time now people have used direct access trading, which in most cases is not much different to the traditional way, with the exception that your order gets sent electronically to your broker who then processes it.

With the introduction of online stock trading order, execution has improved dramatically. You are now able to route your order directly to the exchange without any middlemen involved. Access to the market that was formerly only available to institutions is now available to everyone. You can decide which way your order is going to be routed and you can change or cancel it at any time in an instant.

On your level 2 screen you can see all the competing bids and offers for any stock listed at the NASDAQ. Every market maker and every ECN is displayed in the level 2 window and you can directly trade with them. Think about how fast your voice travels over the phone? This is the speed you can use for routing your orders. It works solely electronically and there are no middleman involved.

Now we are going to look at some aspect of online stock trading. Let`s go ahead and start with Chosing a new broker.