Online Trading is a recent phenomenon and many investors have started to open trading accounts with companies, which provide online trading facilities.
If you have a computer with a decent Internet access online trading can ease a lot of your troubles, which you face with the traditional offline brokers. It is particularly useful for those people who regularly invest in IPOs. Anyone who has invested in an IPO will tell you how easy and convenient it is.
One of the biggest problems faced in offline brokerages is that the IPO is opened for a very short period of time and very often investors are scrambling for application forms or making cheques or drafts in the name of the company for which the IPO is there. Very often these cheques / drafts have to be made for escrow accounts and the names are not very straightforward. Quite a few investors end up making mistakes in entering the names and although it seems like a silly small thing many investors end up losing the opportunity to invest because of this reason. This hassle is not at all present in online investment as you do not have to write cheques or drafts, just simply decide the number of shares that you want to buy and apply. The money is automatically transferred and there is no need to write any cheques.
Another perpetual problem especially with those IPOs, which are in high demand, is that the application forms invariably finish by the time you get to your broker’s office and you have to again run around to get a copy of the same. This is a story, which is oft repeated at every popular IPO, and getting an online account is a good way to get rid of this problem as you do not have to worry about the form and can apply without one just by a few clicks.
Whenever you log onto your account you get to see which are the IPOs which are open currently and therefore it becomes easy for you to keep a track of these IPOs and the likelihood of your missing investing in one “just because you didn’t know” decreases.
Another problem that people who invest in IPOs face is the refund money (because of the difference in the shares applied for and shares allotted). Some investors have faced the problems of misplaced cheques or getting them after a long delay whereas in the online accounts you get this refund pretty quickly and your trip to deposit the cheque in the bank is also saved as your money is transferred automatically in the bank account that is linked to your trading account.