Knowing about trading platforms and how they work is a key aspect of self-guided investing. The mechanics of trading financial instruments requires accuracy and precision. If transactions are not carried out flawlessly and in a timely manner via the best networks available, traders and investors face significant disadvantages.

1. Moneycation
Published by Moneycation™
Newsletter: May 12, 2015
Volume 3, Issue 10
Trading platforms
The decision to trade and invest in financial instruments is a
substantial in terms of personal financial planning. Many times,
people leave the financial management of their investments to finance professionals such as mutual
fund managers, certified financial planners and financial advisors. Often, this takes place via pooled
investment instruments such as mutual funds within 401(k) plans and company sponsored
individual retirement accounts. In such cases, using an investment trading platform is not always
necessary from a retirement planning perspective. Nevertheless, many people can and do invest on
their own, and this is typically done through an online trading platform.
Trading platforms are owned and operated by brokerage firms such as TD Ameritrade, Charles
Schwab, eTrade etc. Many such firms are labeled discount brokerage firms because investors are
able to access trading platforms and make trades for flat rate fees per trade. In some cases, these
fees remain the same regardless of the size of the trade. A dramatic rise in retail investing took
place during the 2000's. This was a time when Internet access, capacity and capability expanded
rapidly. Brokerage firms took advantage of this by making online trading platforms more widely
available to consumers and retail investors. After that, an online trading boom began and lasted
several years into the Great Recession.
The world of retail investing is still inherently risky, but as new financial products and services
emerge through brokerage firms, the trust of self-guided investors is slowly being won back. One
such example of this is the case of binary options contracts according to Dan Cook of Information
Week's WallStreet and Technology. Moreover, as the financial markets change and as new
generations of investors look forward to the future, a natural organic growth in the retail investing
world is likely to be evident at some level. In any case, to participate in such investing many times
necessitates the use of trading platforms, which in and of themselves require a certain amount of
know how, skill and tech savvy.
Brokerage accounts
Opening a brokerage account is an important banking decision that affects individual finances and
any financial commitment made to the account. Understanding how the account works and where
one's individual responsibilities lie in regard to managing the account is necessary. Being properly
informed of what brokerage accounts entail is instrumental in the choice to open one. Below are

2. some questions worth considering before opening a new brokerage account.
What types of services are offered?
The types of services offered by brokerage accounts often surpass those of traditional banking. For
example, some financial institutions offer spread betting, and full-service brokerage firms typically
offer financial planning services as well. In other cases, premium services are only reserved for
account holders with higher net worths. An alternative to this is to obtain the advice of a licensed
securities professional on a per transaction basis via commission on services rendered.
Are the financial instruments worthwhile?
The range of financial instruments offered by various brokerage houses is staggering. Choosing the
right financial institution is therefore, of paramount importance to the future of one's finances. This
is because the financial products invested in influence potential yields, capital gains taxes, and
opportunity cost. Carefully researching what an individual brokerage firm has to offer in addition to
the advantages and disadvantages of a brokerage firm is key to making the right banking decision.
How well are the account assets protected?
Asset protection is something all investors should take seriously because of the potential
consequences of not being fully aware of specific investment risks. For instance, assets held within
a brokerage account are not necessarily insured, and not all account types are protected from
creditors. Different assets and accounts have varying levels of security that investors would do well
to understand prior to opening an account, and before engaging in transactions through that
account.
Do available accounts suit specific financial goals?
Differing accounts are offered by various brokerage businesses. To illustrate, some brokerage firms
offer individual retirement accounts and individual business accounts, but do not necessarily offer
exotic financial instruments, whereas other firms make more unique financial products available
including simulations such as a currency spread betting trial account, but do not necessarily provide
those products through a wide range of accounts.
Which jurisdiction is the best choice?
Jurisdiction is a major factor when opening a new brokerage account. Since each jurisdiction is
subject to the laws and regulations governing it, the impact on individual banking is noteworthy.
For example, Panamanian corporate brokerage accounts are not taxed in the same way as an
individual brokerage account located in the United States. Before opening a brokerage account with
a large balance, investigating brokerage account jurisdiction options and advantages is potentially a
time worthy pursuit.
The ability to utilize expertise and resources to acquire capital gains is essential to the success of
individual traders of financial instruments. In this sense it is the responsibility of traders to discern
between poor and prosperous techniques and strategy. Numerous drawbacks befall even the best

3. and most talented of industry experts. However, once a trader becomes experienced,
knowledgeable, and refined in his or her practices, avoiding the financial pitfalls associated with
online securities transactions becomes more possible.
Opportunity
A key factor that draws millions of people to online securities trading is the substantial opportunity
to increase personal wealth. Monetary gains on well implemented trades often yield returns far
above more conservative forms of money management such as federal treasury bonds. The
potential to earn hundreds, thousands and even millions is possible via online securities trading and
via several financial instruments such as spread betting on currency pairs.
Experience
A key benefit of trading financial instruments online is the acquisition of tactical knowledge and
ability to implement learned trading strategy. Using brokerage tools helps develop awareness of the
affects of market forces such as volume and economic events on asset prices. Furthermore, the
trading process and simulations help acclimate brokerage account holders with the best trading
mechanisms to use at specific times. For instance, in intraday arbitrage, knowing when to buy or
sell using limit orders vs market orders and all or nothing trades, is important, if not essential to a
well implemented transaction.
Value
Another important benefit of securities trading is the value provided by online brokers. For
example, discount brokers that only charge transaction fees and exclude commissions via self-
directed accounts often only cost pennies on the dollar. Moreover, the larger the transaction amount
is, the smaller the proportional cost associated with that trade becomes. In addition, a wide range of
complementary digital tools such as a spread betting demo account assist traders learn how to make
the most of their money.
Risk
Online securities trading is risky. The financial products are not typically insured and market
volatility has a dramatic affect on the price of securities. When combined with leverage or margin,
capital losses are multiplied and substantially lower asset worth if prices go the wrong direction.
Reducing risk exposure entails locating financial instruments that have higher yield for the least
amount of risk. Ideal risk management also involves allocating assets in such a way that overall
portfolio yield rises despite any capital losses on riskier assets. To further illustrate the risks
associated with online securities trading, the eHow video below discusses investment techniques
that affect risk.
Complexity
There is a significant learning curve associated with online securities trading. If trading platforms
are simplified, they do not necessarily make up for a lack of market knowledge and experience.
Moreover, most digital brokerage services provide glossaries, demonstration accounts and tutorials

4. precisely because there is a level of complexity involved with the trading process. Not being fully
aware of the pitfalls of online trading such as failing to use a stop-loss order, or using too much
leverage on risky buy order makes it that much easier to make a small, but costly error.
Brokerage platforms provide online investors and traders a wealth of money management
opportunities. Choosing between brokers is a decision that affects financial objectives for as long as
a brokerage account is used. In some cases, owning more than one brokerage account provides
experienced traders with wider options. Paying close attention to account benefits, features and
terms assists with evaluating the quality and potential of a digital brokerage service provider.
Service
Service is a substantial factor weighing into the decision to open an account with a digital
brokerage platform. A physical address, trained customer service support and regulatory licensing
are just the beginning. Additional considerations include multiple account types, online bill paying,
direct ACH money transfer and secure transmission of financial data over the internet. Additional
service factors to take into account are transaction fees, minimum balances and margin interest
rates.
Speed
Reliability in the carrying out of transactions and user interface speed are also important aspects of
a digital brokerage platform. This is especially true for those using speed based strategies such as
event driven intraday currency trading. Furthermore, fast and accurate access to the best available
rate spreads help customers make competitive bid and ask decisions in addition to effectively
placing orders designed to take advantage of changes within securities markets.
Securities
Access to innovative financial instruments and products is advantageous to online brokerage
account holders. This is because a diversity of financial products improves maneuverability in fluid
securities markets. For example, being able to select from trading mechanisms such as spread
betting, arbitrage and hedging benefits customers by providing them with the right products for
each type of market environment and trading strategy.
Tools
Without specialized financial tools, traders of financial instruments would not be able to make
informed decisions, perform technical analysis or carry out multiple trading techniques. Online
tools such as stock screeners and historical charting allow enhanced assessment of financial
securities with the click of a button, or the touch of a screen. Other useful tools including heat
maps, trading simulators and programmable orders further empower the securities trading process.

5. Example Trading Screen
License: Peebs80; “GSFE Level II Trading Screen”; GFDL, CC BY-SA 3.0
Resources
Many firms that offer digital brokerage platforms also provide traders with educational tutorials and
access to research studies or reports. Outside of an account these resources are not necessarily free,
and are therefore a considerable advantage of brokerage accounts that provide them. Historical data
such as fundamental statistics, intraday pricing patterns, relevant economic data and up to date
news alerts are all informational assets when placing one's money into a brokerage account.
Online brokerage accounts are self-guided money management command centers in the sense they
offer a lot of sophisticated financial tools and instruments such as stock options trading platforms,
margin accounts, currency trading analysis tools etc. that allow individuals considerable control
over the investment process. The pros and cons of using online brokerages are that they offer a lot
of flexibility and opportunity, yet also require a fair amount of know how and independence.
Use of an online brokerage account can increase personal exposure to financial risk and may
require a significant amount of time to effectively choose and manage investments. In some cases
online brokerage accounts may be less than ideal for implementation of dynamic financial plans
involving intricate tax strategy and estate planning.
Pros of online brokerage firms
• Research reports

6. An advantage of online brokerage accounts is access to research that might not otherwise be
accessible via other information sources. Investment research is used to help inform financial
decisions and educated the investor about a particular company, fund or financial instrument.
• Investment tools
Another feature of using many online brokerage accounts are the tools readily available to the
account holder. These tools vary in function and complexity and help determine bid ask spreads,
interpret price movements, assess investment potential etc. Examples of investment tools include
heat maps, options price tables, trading platforms, and technical analysis graphs.
• Self-managed
Online brokerage accounts are ideal for the well-informed, individual investor who understands
fundamental principles of money management. This does not mean individuals knew to the world
of investing shouldn't or can't learn how to use an online brokerage account, but it does imply a
certain amount of self-guidance.
Cons of online brokerage firms
• Higher risk
Brokerage accounts have the potential to be very risky. This is especially the case with margin
accounts and option trading. Even non-leveraged investments are subject to considerable price
volatility. In other words, the financial instruments available through online brokerage accounts are
often of medium to high risk.
• Limited Advisory services
Although some brokerage firms also offer access to retail offices, the majority don't, and broker
assisted orders generally cost a higher fee and aren't a standard service. For the most part,
investment advisory services cost extra and are better facilitated with a financial adviser.
Educational tools are available with online brokerage accounts but without supplementary
instruction.
• Discretionary money management
Another option that may not always be available with an online brokerage account is discretionary
money management. This is when a financial services firm such as an investment bank provide
complete money management services including advising and money management. Discretionary
money management allows the investor to choose to have their money managed by financial
professionals.
Managing a brokerage account is a substantial financial, business and fiduciary responsibility in the
case of non-self directed accounts and an important monetary task when self-directed. The
brokerage account, your financial strategy, account services and account management regulations
determine what should and shouldn't be done to protect against liability, maintain a proper client

7. and broker relationship, and appropriately manage assets. The 'do's' and 'don'ts' mentioned below
provide a broad guideline that may assist with the management of a brokerage account.
Suggested Brokerage Account Do's:
• Be aware of risks
• Pro-actively review assets and their management
• Understand the advantages and disadvantages of services
• Know what is required of you and what you are responsible for
Suggested Brokerage Account Don'ts:
• Invest what you can't afford to invest
• Presume you know everything about an investment
• Renege on a margin call or obligations
• Mismanage funds through negligence
Do know what you are responsible for
The brokerage account itself is indicative of what managing that account involves in terms of
products, services, benefits, regulations and risks Your product, the company you work for, and
applicable regulation(s) will decree the terms of how the account ought to be managed; becoming
very familiar with all three of these directives is imperative to your successfully managing one or
more of the following brokerage accounts:
• Broker managed brokerage account
• Self-Directed Brokerage account
• Corporate brokerage account
• 401K or IRA brokerage account
• Offshore brokerage account
Do be aware of brokerage account risks
Being aware of brokerage account risks is not only a good way to ensure your quality as a broker,
but also to substantiate your actions as a broker. You, your client and your company will all have
specific risk management guidelines or allowances that should be clearly understood.
You as the brokerage account manager are the conduit for decision making, rule comprehension and
implementation, client and company goal balancing. Some of the risks self directed, multiple
brokerage account managers, and investment firm account managers should consider are listed
below. As with applicable regulations for specific types of brokerage accounts, risks to may be
more or less relevant depending on what asset(s) are being managed.
• Force of sale risk
• Duration risk
• Currency risk
• Regulatory risk

8. • Management risk
• Product and market risk
• Margin risk
Do understand the advantages and disadvantages of services
Not all brokerage accounts are created equal both in terms of how much they're worth and what
services they offer. Know what you want out of a brokerage account and there's probably a
brokerage account that can come close to meeting your expectations within reason. For example, if
you want to hold stocks, options, bonds and have a money market account all with a theft
protection guarantee there's probably an account that comes close to it. Each account may have
differing commissions, investor tools, research, platforms, products, processing times and broker
assistance that could either be beneficial or non-beneficial to you depending on how you manage
the brokerage account and what you expect from it.
Don't invest what you can't afford to invest
Not being able to afford an investment increases force of sale risk. Properly allocating money
specifically for investments so those investments have time to appreciate or lose value. Since
investments involve greater risk than insured, fixed rate interest bearing accounts, the risk of losing
money is real. Not being able to afford loss or time in the case of long-term investments is
inadequate.
Don't negligently manage the brokerage account
Negligent management of a brokerage account means taking money management; investments, the
investing process, and investment know how for granted. By taking these things for granted,
concern and respect for the brokerage account, your clients and license if applicable, and the
accounts performance wanes. This increases management risk that could negatively impact one or
more of the brokerage account, you, your client(s), and your company.
Don't presume you know everything there is to know
Managing a brokerage account comes with a lot of information from several different directions.
The investment products, the investments, the services, responsibilities, research, process and so
forth all collectively comprise a good deal of data for you to process, comprehend, and effectively
implement while managing the brokerage account. Presuming you know all there is to know can be
detrimental to your performance as a brokerage account manager, and/or the success of your
investments.
Transactions and terminology
Trading platforms include a number of possible transactions such as “fill or kill”, “all or nothing”
and “stop loss orders”, “market orders” and “limit orders”. These are instructions that specify how a
particular transaction should be executed. To get a complete understanding of each transaction and
various trading terms, it is a good idea to consult the trading platforms frequently asked questions,
reference sections and trading instructions. The paragraphs below are an example of trading

9. platform limit orders and serve as an introduction to the kinds of trading terms encountered via a
self-guided brokerage account and also illustrate the level of detail that investors typically deal with
when conducting digital securities trading.
A limit order is simply a buy or sell price that is pre-determined by the buyer or seller of financial
securities. For example, investor Y wants to buy company ABC corporation at a price of
$59.30/Share however the current market price is $65.00 per share. A limit order is a choice to only
buy or sell at a set price i.e. $59.30 for a buy and $67.00 for a sell. Beware however, market orders
can take priority over limit orders potentially causing a limit order to go unexecuted even though a
limit price is reached.
There are several types of limit orders including, but not limited to buy limits, and sell stop limits.
These types of orders prearrange purchase prices and sell prices for securities. This article will
illustrate the types of limit orders, dynamics behind placing limit orders and discuss the possible
benefits of limit orders to an investment strategy.
Types of limit orders
Several types of limit orders exist depending on the goals of the broker and/or investor.
Additionally, other functions such as the "all or nothing", and "fill or kill" options can be used to
avoid only partial execution of limit orders.
• Buy Limit order: Sets maximum price a purchase will take place
• Sell Stop Limit order: Sets minimum price a price may fall before selling
• Trailing Stop $: A moving stop loss that is proportionate to dollar difference from a moving
market price
• Trailing stop %: A moving stop loss that is proportionate to percentage price difference from a
moving market price
How to place a limit order
To place a limit order an investor, trader or speculator must do so through a brokerage account that
deals specifically with the type of securities being bought or sold. For example, if investor Y wants
to buy stock options through the Tokyo stock exchange using limit orders the brokerage institution
must be equipped to do this.
The funds available must be present and the number of shares and corporation name are entered
into the brokerage account ordering system. The option to buy at a limit is one of several types of
order features including market orders, and the time period with witch the order remains valid.
If an investor or broker is dealing with options, limit orders can also be used. The investor or broker
can place a limit order to either buy or sell options at a specific price. The prices vary based on the
current market price of a security and the exercise price of the option among other factors.
Typically, market orders and standard limit orders are less complicated.
When using online trading platforms the limit order option should appear near the order type field
in the transaction page of the online brokerage account. Depending on which brokerage is used, the

10. number of shares purchased, frequency of trading, cost of purchase etc. different brokerage firms
will charge different fees for the transactions.
Limit order strategies
• Limit loss: By placing sell stop limit order loss on devaluation of a security can be held within a
certain price range or percentage. This can assist the investor conform orders to risk tolerance and
overall investment strategy.
• Tax hedge: Using the above example, on Monday, December 31 investor Y decides he can lower
his tax bracket by selling 100 shares of ABC corporation at a limit price of $55.00. Since his
purchase is below his purchase price his decision to sell at a set price before the end of the year will
enable to recapture some of his capital loss through tax savings.
• Target price acquisition: Through a limit order a buy price can be established to trigger the
purchase of security once a price reaches the limit price. This can assist in meeting price purchase
goals.
• Limit order options trades: Using limit orders in option trading can help maximize gain and/or
minimize loss. Since options are leveraged investments the use of limit orders can may be helpful.
• Limit Timing: Timing a limit order may lead to a successful or unsuccessful execution of the
order. For example if a price limit of $50.00 is placed with a buy order with an expiration of one
day and the day's price range never falls below $52.00, this order will go unexecuted and expire.
Thus, placing a long enough time period and/or close enough price to the market price may
facilitate a more successful execution of the limit buy order.
Limit orders are a stock buying method that assist the broker and/or investor in achieving a desired
price range whether it be to buy, sell or trade options. The limit order is a feature of securities
trading that fixes pre-determined buy and sell prices so as to achieve several functions. Some of
those functions are listed below:
• Automates the buy and sell process
• Facilitates timely trading
• Enables price selection
• Helps lower losses
• Allows the broker and/or investor more time to perform other tasks
Several strategies can be enhanced through the use of limit orders, specifically limit loss, tax hedge,
target price acquisition, options trading limits and limit timing. Developing these strategies involves
becoming familiar with the types of limit trades, their purposes, how well they execute and their
implications on other investment options. Not all limit orders execute and a large limit order may
only partially execute depending on the number of shares requested and the extent of time the
security stays in a specific price range. In such instances additional commands can be used such as
the 'all or nothing" option.
The execution of a limit order requires the stock, security or stock option to meet the trigger point

11. for the limit order to execute. This point is usually the price or lower if a buy order and the selling
price of a stop loss for a stop loss limit. There are several advantages to using limit orders that may
help improve an investment strategy, market timing and price selection however the risk with limit
orders is that money tied up waiting for a limit order to execute may stand the chance of being
better invested elsewhere.
Conclusion
Online trading platforms are an opportunity, but they also come with a risk. Elaborate and dynamic
market events combined with relatively complex trading options potentially add to the level of risk
already inherent in various financial instruments such as stocks. Being well informed and
knowledgeable about how trading platforms work is often essential to investing successfully with
them. Making use of simulators, thoroughly reading trading instructions and guides and clearly
understanding financial objectives ahead of time help make the digital trading process more
worthwhile.
Before deciding to trade financial instruments with a trading platform, it is wise to first honestly
consider the probability of success and weigh that against the cost of utilizing a full-service broker
or the guidance of a licensed financial planner or investment professional. Investing is a serious
endeavor that requires a substantial amount of skill and know how. Sometimes impatience, lack of
self-control and a misguided understanding of investment processes can poorly influence even well
seasoned traders. This is not necessarily due to lack of ability, but because of the nature of the
market, which always has an element of unpredictability.
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May 1, 2013
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4. “Turbo Tax”; 6 Ways To Pay As Little Self-Employment Tax As Legally Necessary; Josh Ritchie; June 14, 2010
5. “U.S. Internal Revenue Service”; Appeals Pass-Through Entity Handbook; IRS Revenue Manual: Part 8, Chapter 19
6. “Federal Reserve Bank Board of Governors”; The Twelve Federal Reserve Districts
7. “Federal Reserve Bank Board of Governors”; Industrial Production and Capacity Utilization-G.17; January 16, 2015
8. “Federal Reserve Bank Board of Governors”; Consumer Credit Outstanding; September 10, 2012
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February 6, 2014
10. “Federal Reserve Bank Board of Governors”; Credit and Liquidity Programs and Balance Sheet
11. “U.S. Federal Reserve System”; Bank of America Corporation; National Information Center
12. “Information Week”; The Rise of the Retail Trader- A New Era; Dan Cook; June 23, 2014
13. “Top Ten Reivews”; 2015 Online Stock Trading Review
14. “Fidelity Investments”; Forms & Applications
15. “Investopedia”; What Investment is Best For You?; Glenn Curtis
16. “Wells Fargo”; Investment Advisory and Brokerage Services: A Guide to What You Should Know Before Investing
With Us
Disclaimer: The content in this newsletter is for informational purposes only, and does not constitute financial planning

12. or any other kind of advice, and should not be construed as such. Any opinions or statements expressed by cited third
parties do not necessarily reflect those of Moneycation™. All information within this newsletter is to be used or not
used at the sole discretion of the reader and its authenticity and accuracy are not guaranteed. The author of this
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