What is an online trading system? Simply put, it is any system that you access online (i.e. via the Internet) to allow you to trade the markets you are interested in. So you might have an online system for trading forex, or you might have one for futures trading, or for cash equities or options or any one of a number of other types of instrument.
The key thing with an online trading system that sets it apart from any other type of trading system is that you are accessing the markets via the Internet, usually over a web browser interface.
Many brokers these days are now making such trading systems freely available to their clients. There is a very good reason for this. First, web-based systems are very easy for a broker to distribute to its clients, because such systems operate within the broker’s web site or are accessed through a dedicated web page. Secondly, when a broker offers such a system, clients become tied in to accessing the markets through that broker. This is quite different to the situation with a stand-alone independent system, which generally allows a trader to connect to a broker of his choice.
A question that often comes up is do online, web-based trading systems have any disadvantages when compared to the more traditional stand-alone systems? Other than the fact that you are tied in to the broker who supplied it to you, no not really. Until a couple of years ago, they might have been noticeably slower than independent systems, but with the growth of broadband internet and the massive power available in PCs these days, an online trading system is certainly fast enough for most individual investor purposes.
If you are a novice trader and you are not sure what you need in terms of software to trade the markets, have a good look at what kind of online trading system is offered by each broker you investigate, it could make all the difference when deciding which broker to set up your account with.