Online trading is trading in financial markets via the Internet. Previously, all trading was held in the exchange building in person or by phone. Now, every deal is concluded with the help of an electronic terminal. All you need to start trading is a computer with Internet access and an installed trading system. Internet-trading allows you to make deals on the financial market within seconds or even less. However, one thing still remains the same with pre-online times: a private trader still needs a broker in order to trade. A broker provides a trader with a trading platform – the software that a trader uses to conduct his business.

All buying and selling on financial markets are done through the brokers via the trading platforms they provide you. It goes like this:

1. A trader decides to make a deal (for example, to purchase 100 shares of Apple).

2. He finds this asset (Apples’ shares) in his trading platform, chooses the quantity (100 pieces or 1 lot) and places an order to buy.

3. The broker gets a request from a trader and starts executing the order. He needs to find a counterparty – another trader, who is willing to buy the same asset for the same price. 

4. The broker looks for a counterparty on the stock exchange. When the search is completed, the deal is made.

Nowadays, the trading platform does all the work to find a counterparty and clinch a deal. The trading process is fully automatic; that is why the time needed to make a deal is no more than a couple of seconds. That is why brokers offer such good deals as zero commission trades.

One of the most significant and important innovations that online trading brought is the possibility to trade using leverage. Leverage means that you can buy or sell financial assets without having to pay their full price. Instead you only pay a small fraction of the price, for example 1%. The remaining 99% is funded by the broker. The advantage of leverage is that you can trade assets of much greater value with a small amount of money. Your profit or loss is calculated based on the entire value. For example if you buy a stock worth $100 by paying only $1 and the price of the stock goes up by only 1% then you have made a $1 profit. With your actual investment being only $1 this doubles your money! However, the negative side is that if the value of the share goes down by 1% then you loose all your investment! That is why leverage is a risky game that can make you really rich or really poor in a short time.

You can trade all kinds of financial assets online such as shares, commodities, currencies and cryptocurrencies (like Bitcoin). 

Unlike what most people believe, almost anyone can start trading online. Many brokers allow you to open an account with as little as $100 or $200.