The Internet revolution has radically changed the way people invest. In the past, brokers would visit their clients in person, and orders were taken over the phone to comply with regulatory requirements. However, nowadays, authentication technology has allowed the execution of various types of online transactions and activities. Today’s investors may opt for a traditional broker who offers personalised services, or an online system that is accessible at the touch of a button.
If you are a new investor, how do you choose? And for those who are in the middle of their investment journey, would it make sense to switch to online brokers?
It is wise to learn about the pros and cons of both types before deciding on the path that best suits your needs. Here we take a closer look at the differences between online and traditional brokers.
Online brokers versus traditional brokers
Traditional and online brokerage firms each have their advantages. One significant difference is cost. Traditional brokers offer a wide range of customised services, ranging from offering investment analysis and providing financial information to transacting on your behalf. As a result, their costs are higher as they have overheads such as staff and office space. Online brokers, on the other hand, let you take charge of your investments, and while they offer limited personalised services, their commission fees and trading charges are significantly lower.
Another advantage of online brokerages is convenience. Having an account with an online broker means that you have access to an app that allows you to trade anytime and anywhere, as long as you have an Internet connection. While most traditional brokers try to adapt by developing their own mobile apps, their functionalities are generally limited compared to online brokerages. For instance, Tiger Brokers’ trading platform allows investors to access interactive charts with a variety of indicators, and this feature may be absent in other platforms.
While some investors value the personalised broker-client relationship, wherein the broker will provide market guidance, such an arrangement also means that you are at the mercy of the availability of your broker, and the bank’s operating hours. Meanwhile, online trading takes place 24/7, with no additional charges regardless of the time the order is placed.
The accessibility and convenience of having an online account also put you in complete control of your portfolio. Your trades can be executed immediately, without having to notify a personal broker to act on your behalf. Moreover, this autonomy doesn’t equate to getting less help. At Tiger Brokers, for instance, aside from 24/7 live chat support, there are countless accessible tools on its platform for your market analysis.
How online brokerages help you grow
Online brokers typically offer libraries of information and market updates to help investors assess market risk and make informed investment decisions.
While you can never time a market perfectly, a key to successful trading is to have timely data-supported insights and having the control to execute trades within a selected timeframe. With Tiger Brokers, information is always at your fingertips, and easy-to-use analysis tools are readily accessible via the desktop or a mobile device. These technological capabilities do not only lead to streamlined processes that lower fees and commissions, but also give more comprehensive access to investment opportunities — offering more bang for the buck.
With just a single account and a multi-currency facility, investors can trade in numerous global markets including Singapore, the U.S., China and Hong Kong. Tiger Brokers recently added Australia to its offering to address the growing appetite for equities in the Asia-Pacific region. On average, Tiger Brokers is seeing a growth rate of more than 4,000 new clients a month.
“Technology is a strong enabler in providing convenient access for retail investors to meet their investing needs,” says Mr Eng Thiam Choon, CEO of Tiger Brokers Singapore. “Access to another popular stock exchange like the Australian Securities Exchange will allow investors to diversify their investment portfolio further.”
It’s all about tools, tools, tools
With the rapid advancement of technology and tools for portfolio analysis, the privileges used to be enjoyed by sizeable traditional brokerage firms are also now available to the retail investor. These tools have also become much easier to use. At Tiger Brokers, investors are granted a variety of complementary tools to help them analyse their trades based on their risk appetite. The complementary tools include:
- Technical analysis indicators
- Price-line chart comparison
- Financial data calendar
- Top advancers and decliners list
- Tiger Chaos Timing Index (TCTI)1 quantitative chart
- Customisable watchlist
Choosing the right broker
Undoubtedly, traditional brokers have excellent track records through the years, providing access to resources for one-on-one investment advice or coaching. However, online brokers offer flexibility, convenience and research capabilities that allow you to access market opportunities around the globe at any time.
In other words, online brokerage firms open up to a plethora of opportunities for a seamless investment experience. By bringing the power of the Internet and technology to your investing, online brokerage platforms provide a substantial head start in an industry where time is always of the essence. There’s never been a better time to start online trading.
1. Tiger Chaos Timing Index (TCTI) is a timing strategy based on the Chaos theory. This model focuses on daily trend following. Average holding period is between 16 to 60 trading days.
This article has not been reviewed by the Monetary Authority of Singapore.
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