The advantages and disadvantages of trading futures online

In recent years, online trading has gained immense popularity in Malaysia. It started with trading stocks and shares with local banks. Now, Bursa Malaysia has also opened its doors for people to trade derivatives like futures and options over the internet.

Today, with the online platform, traders and investors not only have access to Bursa Malaysia derivatives, but can also trade offshore derivatives on the Chicago Mercantile Exchange, which has the largest open interest of options and futures contracts of any exchange. of futures in the world, since the announcement of a partnership between Bursa Derivatives Bhd and CME Group Inc in September 2009.

Now individual traders and investors have the option to trade derivatives and commodities on their own or through their brokers.

There are some advantages and disadvantages of trading online.

Advantage

Cheaper commission rates
Since there is no middleman involved, there are no additional fees for services for brokers. You will only have to commit to a minimal amount of commissions for using the online trading software.

instant access
Online commerce will allow instant access as you are the one placing the order yourself. With that, you can act on price movement immediately and take advantage of market volatility, which is especially important in the derivatives and commodities market.

While online trading gives you the convenience, there are also setbacks and disadvantages of online trading.

Disadvantages

No expert opinion
Trading yourself will also mean that you will only rely solely on your own judgment of the markets, of which you are most likely to make mistakes. Having an experienced broker will give you confidence as the broker’s job is to study and be close to the market as well as ongoing news that will affect the market.

no exit plan
Another disadvantage is that no one will tell you to exit your position to close a profit or cut a loss. As humans, we can sometimes trade based on emotions and that can distort judgments and the rationale for investing, regardless of strategies. Having a broker will help reduce or eliminate emotional trading.

Whether you should trade online depends on your level of experience. It also depends on the support of the runner. Some brokerage firms offer additional customer services, such as training classes, so traders can feel confident and comfortable trading online.