Direct Access versus Traditional Online Trading
Are you daytrading? Swingtrading? Depending on your investment style of choice, market access can be a critical factor.
Direct access trading is a technology that allows stock traders to trade directly with market makers or specialists, rather than trading through stockbrokers.
Direct access trading systems use front-end trading software and high-speed computer links to stock exchanges such as NASDAQ, NYSE and the various Electronic Communications Networks. Trades are executed in a fraction of a second and their confirmations are instantly displayed on the trader's computer screen. This is in contrast to a typical conventional online trader who requires seconds or minutes to execute a trade.
Direct access is a must if you plan on daytrading or scalping. Direct access reduces slippage. Slippage is the difference between the estimated cost for a transaction versus what the transaction actually costs. It is of less importance to long term investors.