As the global economy become revolutionized with deregulation and the adoption of the internet, many have regarded online commodity trading as being a godsend while others regard it as being a nightmare. This is due to the fact that there are numerous advantages as well as disadvantages when one opts for online commodity trading. Generally, with online commodity trading, you will be able to execute your trades much faster than normally is possible. In addition, commission charges are much lower with online commodity trading than trading through the traditional brick and mortar broker as the overhead maintenance for an online brokerage is much lower than a brick and mortar office.
Another reason why commission charges are much lower is because with online commodity trading, the speed with which a trade can be executed contributes to the volume of trade that can be conducted. This also allows the trader to have a wider range with which to be profitable in his trading. In addition, online commodity trading is like a one stop resource center. A trader will have almost virtually everything he needs when he logs into his online trading account. He will have access to real time quotes, various technical tools and software to help him decide what is the best market position to be in when he is carrying out his trading activities.
Nevertheless, with online commodity trading, a trader is basically acting on his own. He will have no mentor or an actual advisory who will watch over his trading activities. With this lack of guidance, it is only natural to expect that many traders will be prone to repeating the same mistakes which eventually cost them their “risk capital.” Having a mentor is crucial if we want to improve our trading proficiency.
Another disadvantage of online commodity trading is “over trading”. Encouraged by the low commission and the lack of guidance from a mentor, a trader can easily find himself over trading. There is a tendency for a trader to deviate from his original trading strategy and switch to day trading after he gets bored of holding a market position for a considerable period of time. When this happens, it will be akin to gambling in a casino. In other words, without discipline, online commodity trading can burn a hole in your pocket. On the other hand, for those who adhere strictly to their trading strategies, online commodity trading can be a lucrative venture.