Introduction
Improvement in technology has been revolutionizing the way people operate in various sectors of the economy. Information can easily be moved across the globe in a matter of seconds, and completely change people’s decisions concerning various issues, thanks to the internet. Consequently, it has become important for every business to introduce an online facet in its strategies, in a bid to advertise all its products and enable customers get services online. The online method of doing business is easier and able to support a huge volume of transactions, all of which are controlled a central point. In this regard, the stock markets have also included in their strategies, online stock marketing which enables both brokers and retailers carry out transactions through the internet. The online stock marketing has greatly influenced the way stock markets operate, besides enabling the stock market to easily operate internationally.
Background
There are a number of online stock brokers that have emerged since the introduction of online stock marketing. The technology requires that a person should first of all register with an online brokerage company, which will need some deposit. Customers then are able to instruct which stocks they need to buy using the information that is available about various companies (Turner, 2007). It should be noted that this technology was initially available to brokers only, but has now been made available to everybody. Nevertheless, people are asked to be careful because there are fake online brokerage companies which swindle money from unsuspecting clients and disappear.
Advantages of Online Stock Marketing
Before the introduction of online stock trading, there were few brokers and it was hard to travel or call some of them, which made them charge exorbitant fees. However, due to the large number of brokerage firms which are available and have already embraced the online marketing strategy, the commissions charged have greatly reduced (Turner, 2007). On the same note, information about any changes in the stock market used to take long before it could reach the participating parties, especially the client. However, stock marketing has made flow of information very fast and, within a few seconds, clients can initiate purchase or selling of the stocks. This ensures that any small change in the stock market is utilized fully.
Furthermore, the ease of transacting using the internet has increased the number of people who engage in stock trading, compared to when everything was done manually. With increased numbers and increased accessibility to the stock market, comes the increased volume of transactions that take place in a single day. This has increased the significance of the stock markets in the economy, because of the steady and large volumes of cash that is channeled into the market (Davidson, 2007).
Initially, customers needed advice and assistance from either stock brokers or other experts from the financial industry, in order to make decisions on whether to purchase a certain type of stocks or not. However, this has changed with the emergence of online stock marketing. Price change and other important information concerning various companies can easily be accessed online. Clients can therefore scrutinize stock charts and the sequence of price changes, thus enabling them to make their decisions with minimal assistance (Hauser, Kamara & Shurki, 2012).
Legal and Ethical Issues
Online stock trading has changed the way the stock markets work. Initially, it was closed broker-driven kind of trading though this has recently changed to consumer centered trading, which can be accessed easily by the public (Eid & El-Kassrawy, 2012). However, it has been difficult to determine who bears liability when a deal goes sour between an investor and an online stock broker. Moreover, their needs to be a body that gives guidelines of how the online stockbrokers conduct their business as well as ensuring that investors get the value of their money. By and large, it is incumbent upon the judicial system to ensure that it imposes stiff penalties on individuals who engage in unscrupulous stock trading. This may serve as a deterrent to individuals who may be thinking of fleecing unsuspecting investors.
On the same note, online stock trading has only helped in increasing the knowledge of people concerning the operations of the stock markets, thus making them more skeptical. As a result, traditional strategies of operation are no longer working for these firms, and they have to embrace new techniques. In this regard, brokerage firms have had to shift from the traditional mode of operation where they possessed the information, and only used it to advice investors (Davidson, 2007). Therefore, brokerage firms will need to be regulated to ensure they release all the information to investors and also train them on various investment strategies.
Security Concerns
Since investors and brokers do not meet face-to-face in many instances, the possibility of having unscrupulous brokers who do not execute the instructions of the investors fully is high. This can happen in cases where investors are required to deposit money with fictitious online brokerage firms before starting any transaction, and after receiving the money then the brokers disappear (Hauser, Kamara & Shurki, 2012). Nevertheless, the government can intervene and lay down regulations which will govern the entry of online brokerage firms. In addition, the government may also publish a list of genuine online brokers so that investors could check their desired brokers before committing themselves.
Social Issues
Online stock trading has introduced a whole new lot of traders in the market, due to the increased speed of information movement, as well as ease of trading. The new traders are called day traders and they buy and sell their stocks on a daily basis, depending on the price movements. These types of traders aim at making the highest profits from the stock markets, buy taking advantage of any small changes in price. Besides increasing the number of transaction and flow of cash in the stock market, day traders are associated with the volatility of the stock market, especially in the 90’s (Elder, 2012). It should be noted that before the introduction of online stock marketing, it was practically impossible to have day traders because calling a broker to initiate a transaction would take time, and sometimes the transaction would not take place until the following day. On top, information flow was very slow and customers would not realize small price changes, and even when they did the mechanical structure of transactions would not allow the purchase and selling per day.
Further Research
Technology is very dynamic and continues to change every now and again. Online stock trading is dependent on technological advancement, therefore more is yet to be seen. Computer software is one sector of technology that advances with the need of the customers. Therefore, as online stock marketing clients keep on increasing their demands on what they would like to have, software applications which are customized for these clients are bound to emerge, and this will further evolve the way stock marketing is carried out. Similarly, technological gadgets are continuously evolving to fit the needs of the customers. At the same time, consumers are also increasing their demands to know how the stock market is performing, at every single moment of the day (Hauser, Kamara & Shurki, 2012). Therefore, research needs to be done on the importance of online brokerage firms partnering with the manufacturers of some devices, like cellular phones, to include technology that will enable people follow proceedings of the stock markets from their phones.
Conclusion
Technology continues to define the way people conduct their business deals in each sector of the economy. In addition, investors have also gained knowledge and they cannot be taken for granted, as it was the case initially. Consequently, brokers have to change their strategies and focus more on the investors, giving them the education they require in order to make informed decisions. Given the influence that stock markets are having on the economy, due to the emergence of online stock marketing, caution should be taken to regulate the sector so as to avoid extreme fluctuations which can be harmful to economic stability. Additionally, customer needs are constantly changing with the changing technology. Therefore, any online services have to be improved to be at per with these needs. Online stock marketing also requires enhancement continuously, in order to improve the services that investors receive.
Annotated Bibliography
Davidson, A. (2007). The Complete Guide to Online Stock Market Investor: The Definitive 20-Day Guide. London: Kogan Page Publishers.
This book explains the systems that can be used to make money from online investments on stock markets. It also describes the process of choosing a right broker to use as well as giving insights on the legal issues associated with online stock trading.
Eid, R., & El-Kassrawy, Y. (2012). The effect of Internet Use on Customer relations and Targeting Activities: An Empirical Study of UK Companies. International Journal of Online Marketing, 2(3), 7-20.
This journal investigates the effects of internet use on customer relations and the effects of internet marketing on marketing performance, marketing efficiency and market targeting activities. It therefore elucidates the impacts of online marketing on businesses.
Elder, B. (2012, September 27th). Ladbrokes Out of Lack on Take Over Talk. Financial Times, pp. 44-45.
The newspaper explains the economic shocks that online stock marketing can produce given its significance to the general economy. On the same note, the news paper touches on the setbacks of various strategies of online stock marketing kin relation to the manual trading.
Hauser, S., Kamara, A., & Shurki, I. (2012). The effects of randomizing the Opening Time on the Performance of a Stock Market under Stress. Journal of Financial Markets, 15(4), 397-415.
This journal talks about reduction of manipulation and improving price discovery in the stock market. Additionally, it delves into spot market trading systems and how they impacts on the effects of derivatives on stock prices.
Turner, T. (2007). A Beginner’s Guide to Trading Online. New York: Adams Media.
This book articulates in vivid details how to choose a broker in the highly saturated online stock markets. The book also describes the developments that have taken place as far as online stock marketing is concerned.