Internet trading ensures fast and efficient execution of investor orders. The problem of speed was relevant for professional investors. Usage
telephone or fax to contact the broker often leads the client, especially if the operation needs to be carried out urgently.
The Internet allows the investor not only to follow the changes in quotes in real time, but also to translate their intentions into real action. For example, communication with a trader via e-mail does not provide speed and efficiency - this cannot be called Internet trading. The disadvantage of email is poor protection against unauthorized access. If an investor transmits his orders on-line, this does not mean that the application system is fully automated, since the broker needs to carry out a security check and place the client's order on his own. This takes precious time for the investor. With automated Internet trading, human actions are minimized. Security checks and application placement occur immediately.
The massive interest in Internet trading systems in Russia is primarily due to the success of Internet brokers in the West, primarily in the United States. The reduction in the cost of using the Internet has allowed foreign investment companies, along with traditional brokerage services, to provide services for the electronic conclusion of transactions. The experience of foreign markets shows that companies that focus on the market of private investors (individuals) are most interested in Internet trading today, since they work with an increasing number of relatively small client orders.
Internet trading systems began to appear in Russia after the creation at the end of 1999 at the Moscow Interbank Currency Exchange (MICEX) of a gateway that made it possible to connect brokerage systems for collecting client orders to the MICEX trading complex. At present, work has been completed on the creation of a similar gateway to the Russian Trading System (RTS) for transferring orders to the guaranteed quotes system. Representatives of exchanges announced that trading systems are ready for the additional load that brokerage Internet systems will bring. This burden can be quite significant. If the gateways set up 20 brokers and each had 50 investors, this would mean an additional 1,000 trading places, which is comparable to the number of clients that the exchanges have now. Already, brokerage companies using Internet trading account for 58.6% of the total turnover of the stock section of the MICEX.
Automation of customer service leads to both an increase in the scale of operations, and to the arrival of new customers on the stock exchange. The dynamics of the development of trade using Internet trading is simply amazing.
It is enough to look at the figures characterizing the share of transactions concluded through systems connected using a gateway in the total turnover of the MICEX stock market, the share of transactions in the total number of transactions and the number of participants using electronic systems connected via gateways.
Table 19
Dynamics of the development of securities trading through the MICEX gateway Month, year Share in turnover, % Share in the number of transactions, % Number of companies Nov.99 0.3 0.7 1 Dec. 99 0.8 1.7 1.8 2 Feb. 00 1.1 3 3 Mar. OO 2.4 4.7 4 Apr. 00 6.5 10.6 12 May. 00 11.4 27 Jun. 00 15.5 24.2 41 Jul. .00 17.8 28.1 47 Aug.00 22.3 35 60 Sep.00 24.8 42.1 68 Oct.00 27.9 45.3 77 Nov.00 25.4 49.3 85 Dec.00 26.4 51.3 92 The main feature of Internet trading is the simplicity of transactions. This makes it possible to attract completely new layers of investors to work in the stock market (mainly private and small ones), who were frightened by the complicated procedure of working with a broker and who were not of great interest to the broker as clients due to the relatively high costs of servicing them. A real opportunity to dramatically increase turnover by increasing the number of clients with a slight increase in the cost of servicing them stimulates all brokerage companies to declare their intention to offer Internet trading services to their clients in the near future.
According to the estimates of the investment company Aton, there are several million people in Russia who are ready to invest up to $1,000 in securities, and they can be served effectively only via the Internet.
The development of Internet trading technologies has an important role for the investor. Externally, online trading systems look the same, but the set of functions embedded in them can differ very much. A large number of investment companies are developing online trading systems on their own, “for themselves”. So far, there are no standards on the Russian market that Internet trading systems must meet in terms of the number of simultaneously served clients, reliability, delays in the transmission of orders and information about transactions, etc. It is possible to quickly develop an Internet trading system designed to serve 30-40 clients, but systems designed to work with 1000 or more users in real time with a fairly intensive information flow from the exchange require careful design, testing and a professional approach to software development. provision in general.
Today, there are many companies that provide their services in the field of Internet trading. Among the systems that have received the approval of MICEX specialists are Guta-bank, Alor-Invest, Alfa-bank, Avto-bank, Aton, Zerich Capital Management, etc. The electronic broker who will be able to offer the same wide range of services as the traditional one. These are financial services directly related to trade:
Advice on the stock market;
Technical analysis;
Financial reporting on completed transactions;
Client portfolio analysis;
Lending to the client in cash and fund assets;
Working with derivative financial instruments In 2000, the period of formation of the electronic broker market ended, and the standard of the modern Internet brokerage system was formed, which has the following features.
For client:
Work on all major trading platforms,
Maintaining online portfolios of assets,
Automatic margin lending,
high working speed,
Cash and securities management,
Support for requests with deferred execution,
Advanced reporting and analytics,
Information service (news, market analytics),
Immediate execution of orders on the exchange,
Various channels of access to information. For a broker:
Integration with a back office adapted to the processing of a large number of transactions in real time,
A developed risk management system, without which the risks of providing margin leverage become too large.
Advantages of Internet trading:
1. The client can make decisions on financial portfolio management himself.
2. Internet trading gives an electronic trading participant the same opportunities as a broker with access to the trading terminal of the exchange system.
3. The use of automated trading technology reduces transaction fees. This allows the investor to play on intraday trend fluctuations, fixing speculative profits.
4. Internet trading allows you to serve investors arbitrarily remote from the broker. This increases the technological capabilities of the broker to attract a large number of clients from different regions of the country.
Disadvantages of Internet trading:
1. The role of the broker as a consultant and manager of the client's portfolio is decreasing.
2. The systems do not include the possibility of portfolio management, financial risk assessment, risk management using derivatives market instruments.
3. Existing systems provide work only on 1-2 trading floors. This increases the risks for the client.
4. A professional broker uses a huge amount of information to make trading decisions. Exchange trading access systems do not provide the investor with such information.
5. Internet trading contributes to the development of margin trading mechanisms, which, as you know, play
an important role in the functioning of the stock market, being one of the tools to stimulate supply and demand. Mass investment is a risky process, so at any moment a situation of excitement may arise in the market.
Thus, electronic trading systems significantly expand the investor's opportunities to conduct trading operations. But the existing electronic trading systems increase the risks of loss of invested funds due to insufficient information support, relatively low qualification of an individual bidder.
Fraudulent schemes when trading securities using the Internet
Due to the increase in the number of sites on the Internet that offer Russian-speaking investors the opportunity to trade shares of American and other foreign issuers using the Internet, investing money using the Internet is associated with the risk of being involved in various kinds of fraudulent schemes. We will provide information based on the results of the analysis of fraudulent activities identified by the US Securities and Exchange Commission.
Types of schemes
1. Scheme "increase and reset" - a type of market manipulation, which consists in making a profit by selling securities, the demand for which was artificially generated. The manipulator, calling himself an informed person and spreading false information about the issuer, creates an increased demand for certain securities, increases their price, and then sells the securities at inflated prices. After the manipulations, the price in the market returns to its original level, and investors are at a loss. This technique is used in conditions of lack or absence of information about a company whose securities are rarely traded.
2. The scheme of the financial pyramid when investing money using Internet technologies completely repeats the classic financial pyramid. When using this technique, the investor makes a profit solely by involving new investors in the game.
3. Scheme of "reliable" investment of capital - distribution via the Internet of investment proposals with low
level of risk and high level of profit. These are offers of non-existent, but very popular projects, such as investments in highly liquid securities of banks, telecommunications companies, with unconditional guarantees of return on invested capital and high profits.
4. "Exotic" offers - for example, the distribution via the Internet of an offer of shares in a Costa Rican coconut plantation that has a contract with a chain of American department stores with a bank guarantee of receiving the principal amount of the investment plus 15% of the profit.
5. Fraud using banks - lies in the fact that fraudsters, hiding behind the names and guarantees of well-known financial institutions, offer investors to invest in unsecured obligations with unrealistic returns.
6. Imposing information - often investors are misled by false information about the issuer, exaggerated growth prospects of companies whose securities are offered. Information can be distributed among a wide range of network users in a variety of ways: posted on information sites, electronic bulletin boards, investment forums, sent by e-mail.
The anonymity provided by the Internet, the ability to reach a large audience, the high speed and much lower cost of dissemination of information makes the Internet the most convenient tool for fraudulent activities.
Thus, in order to avoid loss of funds when investing in foreign stock markets, the investor should adhere to the following rules:
1. Consciously approach the choice of investment object.
2. Contact the services of a broker.
3. Carefully consider various kinds of "tempting" offers.
4. Exercise caution when providing information about passwords for accessing an investment account.
5. Use limit orders to avoid buying or selling stocks at prices higher or lower than desired. A limit order assumes the presence of a predetermined execution price by the investor. In the case of placing a market order, the investor has no control over the order execution price. The broker can abuse the investor's ignorance about the prices prevailing in the market, which can lead to financial losses for the investor.
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Introduction
1. Essence of Internet trading
2. Types of Internet trading
3. Making transactions through Internet trading
4. Risks arising from exchange trading via the Internet
Conclusion
Used Books
Introduction
The current century is the century of all kinds of technologies and innovations. And it is impossible to imagine that in modern life there is at least one side of people's lives in which the Internet has not brought something.
The development of technologies in the great network has recently acquired a very rapid character. Through the Internet, we can no longer only find the information we need, but also pay utility bills, make purchases, book air and railway tickets, hotel rooms and tables in restaurants.
Internet technologies have advanced far in recent years, they have become even more perfect. Now it is not at all new when we hear that it is possible to purchase any securities through the global Internet. At the moment of an eye, it is now possible to form your investment portfolio, and it is also easy to manage your assets, while quickly receiving the necessary information, no matter where we are at the moment.
Every time more and more brokers and banks turn to making trading operations with securities via the Internet. The most important feature of Internet trading is the ease and simplicity in performing the necessary operations.
1. EssenceInternet tradinga
Today, there is a wide variety of ways to use free cash - from primitive storage to large purchases (real estate, vehicles, land, etc.). Each option chosen has both advantages and disadvantages. However, hundreds of thousands of people in developed countries believe that one of the best and most effective ways to invest money is to purchase securities. Thus, the funds are sent into circulation to receive a good profit in the form of a constant income from dividends, or in the form of income from various trading operations with them.
Internet trading (Internet trading) - remote access to trading (investment) accounts via a personal computer and the Internet with the possibility of making transactions for the purchase / sale of shares and other stock values
Internet trading is one of the most affordable and easy ways to sell and buy securities on the stock exchange. Buying and selling on the web is a smart way to get your money's worth, and while investments always come with a certain amount of risk, the reward for risk is greater rewards.
Today there is such a situation that various economic markets (currency and stock) have become even closer to private investors. This fact is reflected, first of all, in the investor's ability to monitor the situation on the market and conduct trading operations with financial instruments and funds in "real time". This opportunity has appeared for investors, thanks to the development of the Internet and the emergence of "on-line" brokers. The services of this type of broker consist of the same services that an ordinary broker can provide, however, in this case, the Internet is the intermediary in the relationship between the broker and the investor. This feature gives the online broker the opportunity to provide such a service as the timely provision of timely and necessary financial information to the investor in real time.
Thus, the service of a broker through the Internet is a service that is provided by a bank or a brokerage company, i.e. an intermediary that enables the client to carry out transactions for the purchase and sale of foreign exchange and securities in real time via the global Internet.
The "On-line" broker service includes:
Specifically, the possibility of performing an asset purchase and sale operation in real time;
Possibility of opening accounts in different foreign currencies;
Creation of an investor's portfolio;
Possibility of using credit support;
Possibility of hedging positions;
Providing the opportunity for the client to participate in mutual funds;
Providing the client with prompt and accurate financial information on constantly changing exchange rates and quotes of securities;
Providing the client with analyst articles, graphical information, opportunities to use professional assistance, as well as technical market analysis, etc.
It should also be noted that Internet trading is a modern technology for making transactions with securities, which gives the broker company the opportunity to automatically serve the largest, but at the same time, a limited number of customers, providing data on customer requests directly to the trading system of the exchange.
The main components of online trading are:
1. trading system,
2. Internet trading users,
3. "online" brokers,
4. Internet trading software.
Let's consider these components in more detail.
A trading system is a system of rules that an investor clearly adheres to when opening various types of positions. This system of rules lends itself to programming, testing and optimization. This system is an organized market, i.e. an exchange that controls the supply of shares and the timely payment of the transaction; the exchange, among other things, imposes specific requirements on the securities with which purchase and sale operations are carried out. In the Russian market, access to exchange trading is allowed only for professional participants.
Internet trading users are people who have money that is not involved in any commercial transactions and who have a desire to place their money on the securities market with maximum convenience, speed and comfort for themselves. To do this, they turn to an intermediary - an Internet broker.
An Internet Broker is a broker that can provide some or all of the available services to those who wish using the global network. The direct duties of an Internet broker include receiving orders from the client for the execution of a transaction, providing him with reports on transactions made on these instructions, depository and any other offers.
All other brokerage offers (consulting, informational) are considered related, but in the Internet version, the smallest set of brokerage services is provided. This is one of the primary reasons why internet brokers charge the least amount of brokerage commissions. There are a large number of Internet brokers around the world. These range from start-ups to divisions of reputable investment banks, traditional brokerage firms, and mutual funds.
An Internet trading system is a system that allows you to purchase and sell securities or hard currency via the Internet. It guarantees direct access to the exchanges online from a personal computer from home or office. Using the capabilities of the system, one can buy or sell shares on the stock market without the help of others, or acquire and sell hard currency on the market in real time at current stock quotes.
2. ViewsInternet tradinga
Through the global network, people now have the opportunity to trade in any market, at will - both on the foreign exchange market and on the stock exchange.
Trading through online Forex. This type of trading is considered more common and easy to understand. It is quite easy for the customer to track the actions that have a great impact on the rates of hard currency and analyze the state of the market. Profit in this type of trading comes out due to the constant change in hard currency quotes, the client has the opportunity to open his position in the direction of the trend and close it already with income.
In order to increase the volume of transactions, the client is provided with leverage, which allows you to increase the required amount of funds available to the client several times. Its size varies from 1:10 to 1:1000, in other words, having only $10 available, the customer is given the opportunity to get $10,000. The leverage service is provided free of charge.
The amount of earnings varies depending on the size of the client's deposit and the volume of operations performed, for example, if the client purchased 0.1 lots of euros for $12,500, and two hours later the rate rose by 50 points and the price of 0.1 lots was $12,550 - in In this case, the customer's profit became $50.
It is possible to carry out such an operation with only $10, as well as using a leverage of 1:1000. However, it is necessary to accurately select the direction of movement of the SLE rate. Forex web trading is carried out with the help of Forex dealing centers, they directly act as intermediaries and provide all the necessary software and consultations, and from time to time, free education.
Stock trading. Much more difficult than online Forex trading, here the promotion rate is already greatly influenced not so much by external reasons, but also by the internal policy of the management of the company itself and a host of other circumstances. All transactions are executed on the stock exchange, similarly with the participation of specialized firms of arbitrators.
Receiving benefits is the same as in Forex, only in such a situation, the object of trading in the Forex market is already blocks of shares or other securities. For example, a client is sure that for the foreseeable future there will certainly be an increase in the cost of gas on large exchanges, and acquires a stake in a large company. With all this, the leverage of the credit lever is applied in the same way. After the increase in value has taken place, the shares are sold at a profit.
Whatever type of online Forex trading you would choose. This is a great opportunity to start making money on your own and not be at all dependent on the mood of the leadership and the situation in the country. You should not expect that online trading in the Forex market is a simple way to earn money, along with large amounts of benefits, there is a huge risk here, and in order to be a specialist, years of practice must pass.
In the practice of the Russian economy, two more types of Internet trading are also distinguished:
1. Access to the market for Internet trading in shares is carried out through an intermediary.
The broker is considered the nominee of any shares listed on the online stock exchange. It also gives the client Web access to their own trading terminals, which are connected to virtual trading systems and exchanges. The customer only gives orders for transactions in real time. In addition to all this, the customer is guaranteed to have the opportunity to receive all reports on completed transactions, receive expert advice, watch the news feed, and so on. Currently, this access option is considered to be the most popular all over the world.
2. Direct access to the exchange
The investor personally trades shares on the stock exchange in real time using a special software system without the mediation of an Internet broker. The superiority of this method is the efficiency of the system, because. it is possible to both carry out and withdraw the transaction. The disadvantage of this method is considered to be the highest risks (the investor works without the help of others in the absence of the support of specialists).
Comparing Internet trading in Russia with Internet trading in the USA, it is possible to find some differences. In foreign practice, Internet trading happens:
- "global" - executed through Internet brokers, which are discount and guarantee automated collection of orders with their subsequent transfer to a market maker for execution;
- "prestigious" - executed through the Electronic Communication Network (ECN), which provides a live broadcast of the order either to the selected ECN, or to the NASDAQ queue under the name of the appropriate ECN, or to the professional on the NYSE.
3. Making transactions throughInternet trading
How does the direct process of making a securities transaction through Internet trading take place?
A trader who wants to purchase or sell shares is used by the exchange terminal and submits his application to the exchange, where he indicates the names of the shares, the number of lots and the desired execution cost. The order goes to the exchange, where there is an automatic comparison about the presence of counter orders with a specified value or much better (as an example, we can offer the following situation: according to the client’s order, which is put up for sale, a purchase order is searched for with the same value or more) .
When such a counter order is present, a trade occurs. And if such a counter order was not found, then the order is entered into the information base of the exchange and waits for the moment when a counter order appears, or until the client cancels his order.
During the trading session on the stock exchange for any security in the information base there are orders to buy and sell. The order queue is set to the best value type. Buy orders are lower, sell orders are higher, and there is a gap between them (Spread). The lower limit of the spread is considered the best buy order, and the upper limit the best sell order. For liquid stocks, the Spread is not large, and transactions occur frequently, but for low-liquid stocks, the Spread is rather large and the number of transactions carried out is quite small.
The top ten sell orders and the top 10 buy orders can be observed in the Internet trading program in a special window called the "glass" of quotes.
4. Risks arising from exchange trading via the Internet
After the investor has chosen a specific trading platform, he proceeds directly to the actual trading on the market. In the course of its activity, the investor is obliged to foresee that participation in Internet trading is associated with a large number of risks.
In the event that an ignorant, non-professional investor came to the market through Internet trading, who is poorly versed in the main principles of the functioning of the stock market, sometimes destabilizing it with his own acts of purchase / sale, which is often a prerequisite for conflict situations. And here the broker's mission is to provide not only technical, but also consulting assistance with the aim of reducing the economic risks of decisions made by such players.
Risk is generally understood as the possibility of a negative action occurring. If we look at economic risk, then this is the probability of losing a share of personal assets, shortfall in profits, or the appearance of additional costs due to activity.
Let's consider what dangers await a private investor in the market during Internet trading. This kind of danger can be divided into several groups:
1 category. Network risks. This group includes dangers stimulated by the transmission of confidential paid information over telecommunication networks of single use. Since the Internet was formed as a completely open network for a wide exchange of information, the template data transfer protocols used in it are not designed to protect the transmitted information and do not at all guarantee a sufficient level of reliability in the mutual identification of the parties exchanging information and protection against falsification of the transmitted data.
2 category. provider risks. This group includes the dangers associated with the volatility of the telecommunications services provided by the Internet. Due to the variability of the network bandwidth, the probable loss of part of the packages, the customer trading through the Online has the opportunity to be deprived of timely information sufficient for making investment decisions, or to receive this information out of time, which will not make it possible to perform a sufficient operation (for example, put or cancel the application) at a critical moment.
3 category. technical risks. This group of risks may include dangers caused by the quality of implementation of the electronic brokerage system used by the market participant: the stability of its operation, its safety and reliability, and reactivity.
4th category. Fraudulent risks. As a result of fraudulent activities, confidential paid information may be stolen, the server or the channel of communication with the Web may be temporarily disabled, which will lead to the inability to provide visitors with access to trading services.
To minimize this category of risks, it is possible to use special cryptographic protocols that provide a fairly high degree of transmitted information. Software tools that implement cryptographic protocols have every chance of being integrated into electronic brokerage systems.
This group may similarly include the dangers associated with the quality of the implementation of the electronic brokerage system. In the form of measures that compensate for these dangers, it is possible to suggest the use by organizations providing brokerage offers of teams of fairly competent developers when creating electronic brokerage systems or the purchase of one of the high-quality systems of this kind from developer firms.
5th category. Legal risks. There is no legal concept of "electronic document" in Russian legislation, and the only legal precedent that can be appealed is the fact when an electronic digital signature was recognized as confirmation by an arbitration court. This kind of danger has every chance of being significantly reduced by taking appropriate legal measures - making clear language in bidding agreements.
6 category. Risks of non-professional participants. These are the dangers associated with the entry into the stock market of a rather large number of bidders who are not specialists. These accomplices are much more susceptible to various opportunistic, marketing and propaganda influences.
The bulk of private investors lose their own cash simply because they do not follow the rules of wealth management. Playing on the stock exchange urgently requires special preparation. It is important to know and use the basics of planning and risk management. The most difficult moments most often come after the first few effective trades. The newcomer gets the impression that he has already understood all the subtleties of the specialty, and then he begins to increase the volume of contracts without evidence, neglect the rules of personal wealth management, or trade on a whim. Most of the time, it ends badly.
Most beginner traders expect rapid success. They evaluate the stock exchange as a casino. And this is the main misconception. Naturally, there are examples of unexpected furor. Although the exchange is, for starters, serious work, but not gambling. And this work has its own laws.
The rise in the volume of operations executed through Internet trading has led to the fact that almost all Internet brokers have realized the need to create a personal risk management system for any client.
The success of the favorites of the current stock market is largely considered the result of the fact that they, earlier than others, not only realized the need to manage market risks, but also implemented progressive risk management procedures in practice.
Risk management is the process of identifying and assessing risks, among other things, the selection of methods and control devices to minimize risk.
Risk marketing includes:
* identification, analysis and assessment of risks;
* preventive development of a program of measures to eliminate the results of crisis situations;
* development of survival mechanisms;
* creation of an insurance system;
* Forecasting the development of the enterprise, taking into account the probable change in the conjuncture and other events.
A private investor, as a full-fledged participant in the securities market, is subject to economic risks. Risk management systems are aimed at directly reducing this category of risks. The main methods for reducing monetary risks are considered to be insurance, reserving, hedging, distribution, diversification, minimization and avoidance (refusal of a risk-related operation).
The concept of "hedging" means limiting risks on underlying assets. The purpose of hedging is to eliminate the uncertainty of future currency flows, which allows you to have an absolute idea of \u200b\u200bthe future earnings and costs arising from trading. In other words, hedging is a method of insurance against probable costs by concluding a balancing transaction. The purpose of hedging is to achieve a suitable risk structure, i.e. the best fit for the investor between the advantages of hedging and its price.
There are three key ways to hedge:
1) the sale of an asset at the present time at the prices of deliveries of future periods (for example, futures contracts);
2) the exchange of economic obligations, such as the exchange of current obligations for future ones (for example, swap transactions);
3) the probability of acquiring an asset in the future at the request of the client or the trader (for example, options).
This method cannot reduce the systemic risk associated with unpredictable changes in legislation, the introduction of duties and excises, and so on. In such situations, hedging can only exacerbate the situation, since open urgent positions do not make it possible to reduce the negative impact of these acts by reducing the size of transactions.
There can be a large number of risk hedging patterns, depending on the purpose of the hedge. When deciding whether to enter into hedging transactions, it is extremely important to accurately qualify the objectives of the hedging in order to adequately evaluate its effectiveness. An erroneous goal setting, or an incorrect idea of the tasks of conducting operations, will give rise to false decisions.
Diversification is considered to be a method of reducing overall exposure to risk by allocating funds among various assets, the value or profitability of which is weakly correlated with each other. The essence of diversification is to reduce the most likely losses in one event. With all this, at the same time, the number of types of risks that need to be controlled increases. But diversification is effective only for the risk associated with a particular instrument, while the regular dangers common to all the instruments under consideration cannot be reduced by the portfolio structure reconfiguration method.
Restriction of operations is considered one of the more well-known methods of risk management and is the limitation of the quantitative data of individual groups of operations. The limit is a quantitative restriction and is needed when, during the execution of operations, the required data on the riskiness of operations are not taken into account. If you need software, you can set positional limits, "stop loss" limits and others. For example, non-compliance with the "stop loss" limit causes an immediate closure of an open position, thereby allowing you to cut off unnecessary losses that have every chance of appearing, for example, due to stressful situations.
Insurance based on the distribution of insured risks between insurance partners (insureds) is complicated by the presence of personal atypical risks associated with the activities of a particular investor. The participation of insurance institutions in diversifying the risks of a private Internet investor is very limited and, moreover, rather expensive.
One of the significant moments that contributed to the formation of the risk management system in the modern securities market was the rapid development of margin operations, which at the same time are considered to be instruments of increased risk and increased profitability. In recent years, the regulator has taken concrete steps to streamline margin transactions, most of which urge professionals to create a qualified risk management system.
The main condition for effective work when making margin transactions is that a professional securities market participant has an automated information processing system that allows monitoring the status of the accounts of visitors conducting margin transactions on-line. The probability of fulfillment of this claim by the participants in the securities market directly depends on the level of automation of information processing processes, i.e. on the level of used IT solutions.
The considered risk minimization techniques are not applicable to technical, operational, provider, fraudulent risks and others. This category of risks can be reduced by applying the most progressive and flawless IT technologies for protecting programs, improving the quality of Internet connection and repeatedly upgrading serving servers.
In the face of fierce competition, firms are increasingly focusing on activities to attract new visitors and improve the service of existing ones. Investors working on the Russian securities market grew and changed at the same time with the market, as a result of this, it is at this moment that it is possible to summarize the presence of a fairly wide layer of small and medium-sized investors related to the category of experienced, in other words, their people with the main principles risk management, diversifying operations not only between various sectors of the securities market, but also working through various brokers, since the choice is more than sufficient.
Conclusion
trading broker exchange forex
The Russian e-commerce market is still young, and despite the unsatisfactory awareness of private individuals about the possibilities of investing funds, as well as the low degree of penetration of Internet technologies in the Russian Federation, it has great potential.
The stock market around the world is considered a source of capital raising. A developed securities market gives people confidence in the future and allows them to properly manage their own savings. Securities remain for many the most attractive source of investment for independent capital, as well as a source of relatively affordable money for firms. Internet trading in the Russian Federation is becoming increasingly popular among private investors who have sufficient funds for solid operations in the stock market. The Russian market is one of the emerging markets. There is something to aspire to: illustrative examples around the world demonstrate all the minuses and pluses of different areas of the market. Namely, the formation of the derivatives market will provide an indisputable influx of investors. Futures, swaps, options allow you to minimize the dangers in the market - in accordance with this, you can get a great opportunity to earn more. A well-constructed methodology and technology of the game and portfolio diversification can help you not to lose and make a noble profit.
Undoubtedly, far from the last, and often the most important role is played by IT-technologies. Efficiency and speed of any of the trading platforms, accessibility and wide distribution of the Internet are very necessary and important factors in Internet trading in the stock market. Undoubtedly, in online trading, every second (not even a minute) can be decisive. Therefore, to participate in Internet trading, high-speed servers of Internet brokers are simply needed, which are able to connect to their trading terminal and serve a large number of clients. Among other things, the most modern and powerful computers of trading exchanges are needed so that there are no stops in trading.
The creation of new, development and improvement of existing modern Internet technologies will certainly lead to even greater mobilization of investors in the future. However, attracting a large number of unprofessional and illiterate brokers to online trading in the market will be steadily accompanied by growing economic risks. Internet brokers will develop new risk management systems and modify existing risk management programs. Each time, the increasingly tougher struggle for the client will push them to such forced measures.
The Russian market of Internet trading in the near future is likely to move into a stable stage, where several main systems will be presented - Internet brokers' own developments or provided by trading platforms of other developers. However, the creation of a new system will not lead to decent competition with the existing software, since the online trading market is already "divided". Most Internet brokers are likely to move into the sub-brokering stage in order to keep costs down and reduce costs. It can be argued that the development of Internet trading in Russia in recent years has reached a new level. The technical support is being more and more modernized and improved every year, which in itself leads to the modification of the trading platforms offered by brokers to their clients. It can also be assumed that now it is necessary to pay attention to investment education for the investor: the provision of a full range of introductory information on the entire securities market, about the opportunities and prospects for the development of the stock market. However, it should be noted that the state should also make its efforts to make the market more attractive to private investors.
Used Books
1. ABC of a private investor. Guide to the stock market / ed. V.A. Zverev. M., 2012
2. Groman V. Internet - trading in Russian. St. Petersburg, 2011
3. Gavrilov A.E., Loginova V.A. Securities Market (Technical Analysis). St. Petersburg, 2006
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The Russian market uses about a dozen computer programs that allow private investors to buy shares on the stock exchange. According to experts, their functionality is 90% similar, but there are significant differences. However, it is not so easy for a non-professional to figure out what they are and which program is better to choose.
Absolutely all interviewed experts immediately drew attention to the fact that the client, first of all, chooses not so much the program itself, but rather the brokerage company through which he plans to work. “Investors should not consider the choice of a trading system as the main task when entering the stock exchange,” believes Sergei Starshinin, leading specialist of the stock trading department at Trust IB. - First of all, we recommend the investor to take a responsible approach to choosing his investment advisor and broker partner, to spend time studying such important points as the stability of the broker's trading system, the quality of client analytical support, additional services for clients, tariff policy broker, his reputation in the market. “The main thing is the choice broker- agrees General Director of "Renaissance Online" Maxim Maletin. - The trading system is only one of the tools, and the success of the client's work depends on the quality of the entire range of services. In addition, it is important who maintains the system. The level of its technical equipment and redundancy, the quality of communication channels depends on the availability of resources. One system can be operated in completely different ways by different brokers: for one it works almost perfectly, the clients of the second constantly complain about failures, the expert notes.
Two types of products can be distinguished on the Russian market of trading systems: developments by independent IT companies that specialize in this segment (Quik, Net-Investor, Transaq), and trading systems independently created by large brokers (Aton-Line, Alfa-Direct , Alor-Trade, Online Broker, Z-Trade, SmartTrade).
My own programmer
The question of buying a ready-made or developing your own online trading system was raised before all brokerage companies that now provide remote access to trading. “As practice shows, developing your own system at the initial stages can cost less than purchasing a finished product, or it allows you to fine-tune the system, taking into account all the requirements of the broker, or integrate electronic trading with other services of the broker on-line (for example, the trading system Alfa -Direct" from Alfa-bank is combined with Internet banking)", - Sergey Starshinin from IB "Trust" explains. For this reason, most of the brokerage companies' own developments have appeared.
However, in the future, the costs of maintaining your own system most often exceed the costs of acquiring and implementing third-party development. In addition, it is extremely difficult for brokers to quickly respond to customer requests for system upgrades and optimization. A broker is not an IT company, the purpose of its activity is not to develop the best programs on the market.
The second weak point of our own trading platforms is the need to maintain a whole staff of programmers: a development team (at least 6 people), a test team (3 people), user support (from 2 people, depending on the load). This is a fairly large payroll fund, says Dmitry Antsiferov, head of the trading systems operation department at Finam Investment Company. From the point of view of user convenience, those who are not the first day in the stock market have long been accustomed to certain programs and, most likely, will not want to relearn. Those who have just entered the stock market also prefer the most common trading terminals, since when changing a broker, they most often do not have to learn a new interface.
Whose problem?
"System" ITS Quik"- the most popular on the market both among private traders and professionals. About 80% of clients on the market use it, ”confirms Andrey Aletdinov, managing director of the BCS brokerage company. According to him, the program uses a clear interface and, most importantly, is highly customizable to the needs of the client. There is an options board, automatic traffic control. The program also allows you to export data from Quik to mechanical analysis systems and import transactions from mechanical trading systems. “Quik is a development of the SMVB-IT company, the undisputed leader in the market of trading systems both in terms of prevalence and functionality,” agrees Sergey Starshinin, Leading Specialist of the Equity Trading Department of IB Trust Sergey Starshinin. De facto, Quik has become synonymous with online trading in Russia. Often, in addition to their own products, brokers offer clients Quik.
However, it is far from always possible to unambiguously say that the most common systems are better than the brokerage companies' own developments. “The former are universal in nature, the latter are created to a greater extent at the request of the clients of a particular company and may not suit certain groups of investors,” says Dmitry Antsiferov, head of the trading systems operation department at Finam Investment Company. As for the widespread Quik system, it is far from ideal - many clients complain about crashes in the program. What exactly they are caused by, the manager of the BCS brokerage company Andrey Aletdinov, who offers the Quik platform to his clients, found it difficult to explain. “A difficult question… Of course, everyone has failures,” the expert says.
Sometimes the cause of the problem is a failure in the client's computer, perhaps its software is not able to provide trading platforms with a sufficient level of performance. The speed of access and the occurrence of failures are even affected by whether the network card is built-in or is a separate unit. Also an important point is the speed of Internet access and the stability of the channel provided by the provider.
"Thick" vs. "thin"
If the choice of a trading program and a broker is made, you need to decide on the strategy of behavior in the market. “If transactions are rare, then the speed of the system is not so important. In this case, it is enough to periodically receive market quotes in some way (for example, via SMS), and, if necessary, make a deal, use a system based on web technologies - without the need for installation on a computer and with little Internet traffic, only in order to place application," says Andrey Aletdinov, managing director of the BCS brokerage company. In this case, you can access the broker's website from any computer and, after entering the password, submit an order to buy/sell shares. If the strategy is exclusively speculative - for example, intraday trading, then, of course, the speed with which the order enters the trading system is of primary importance. Typically, in web applications, the refresh rate is about one second. In addition, web applications, as they are sometimes called - stripped-down trading programs, have limitations on the use of technical analysis, the depth of viewing archived data (on WebQuik they are limited to a daily interval). There is no transaction pocket on WebQuik, transactions cannot be imported, and there is no options board.
On the other hand, all this does not prevent the vast majority of clients from working through the WebQuik system, since a client can always look at quotes and submit an application from any Internet cafe. The second argument in favor of a simplified trading terminal is that the trading session on Russian stock exchanges coincides with the standard business day, trading ends at 18.00. Accordingly, many investors can trade only from their workplaces, on whose computers it is often forbidden to install additional programs or access to the Internet is closed for external programs.
Market participants divide customers into two categories: "thick" and "thin". The latter include those who use truncated trading programs, and the former, respectively, those who work with the full version. Unlike the abbreviated one, it gives players much more additional information, allows them to conduct technical analysis, communicate with other players and analysts of the brokerage company, and much more. However, this program is installed, as a rule, only on a home computer and requires special access keys that cannot be entered manually - they are recorded on a mobile storage medium, most often on a flash card.
“A private investor needs to understand that a “fat” client is the main goal for which the trading system was developed. The “thick” client implements all the functionality of the broker’s trading system (trading and non-trading operations), it works more stable and in most cases faster than the “thin” client,” notes Sergey Starshinin, Leading Specialist of the Equity Trading Department at Trust IB. However, the "fat" client binds the investor to the computer on which the program is installed. But if a laptop is chosen as a workstation, then a private investor may not limit himself in mobility. “These are different solutions for different clients. Depending on the needs and capabilities of the client, one or the other option is chosen,” summarizes General Director of Renaissance Online Maxim Maletin.
Futures bet
Russian Internet trading largely repeats the path traveled in the West. The main trend in the development of trading systems of Russian brokers today is the expansion of trading opportunities for clients through access to new exchanges and new countries. Already, many Russian brokers provide clients with the opportunity to trade on Western platforms (LSE, NYSE, NASDAQ). At the same time, more and more often brokers enable clients to trade from a “single” account both on the MICEX, RTS, FORTS, and on foreign exchanges. This allows investors to use different investment strategies without diluting their funds across different brokers or accounts with the same brokerage. “There is only one direction - globalization, if I may say so - “all in one”, and this trend has long been started. Trading systems of Russian developers (for example, Quik) already have access to trading on Western platforms. I suppose that other products of Russian developers will be presented in the near future, allowing trading operations on foreign exchanges,” confirms Dmitry Antsiferov, head of the trading systems operation department at Finam Investment Company.
“Another trend that clearly manifested itself in 2007 is the growing interest in the derivatives market,” notes Sergey Starshinin, Leading Specialist of the Equity Trading Department at Trust IB. In 2007, the turnover on FORTS almost tripled (up to 7.5 trillion rubles), while the growth of trading turnover on the MICEX stock market amounted to 38% (18.5 trillion rubles). “According to our forecasts, options and futures will soon become the main trading tool for a private investor,” the expert says. This means that the developers of trading terminals will offer ever wider functionality of their products, adjusting to the requirements of consumers.
MOST COMMON INTERNET TRADING PROGRAMS IN RUSSIA*
QUIK- the program is adjusted to the requirements of a particular customer (a particular bank, brokerage company). Provides access to all major Russian stock exchanges, as well as, when an additional module is connected, to other sites, for example, to the foreign exchange market. Along with a stationary client terminal, WebQuik applications (for simplified access via a computer that does not have specialized software installed) and PocketQuik (for mobile devices) have been developed.
NETINVESTOR- in terms of basic functions, it is similar to the Quik program, but it has several features, including a developed messaging and file exchange system, which also allows you to negotiate with other users in chat mode. In addition to the stationary terminal, web and Java versions have been released that do not require installation on a computer and run in a browser
TRANSAQ- allows you to access trading even when using a low-bandwidth channel, which is extremely important for investors who use low-speed Internet connections via a telephone line or cell phone to access the Internet
ATON-LINE- IC "Aton" offers its trading system in two modifications: simplified and basic. The first is aimed at a novice private investor, and the second is for an already advanced user
« ALFA DIRECT"- the system was developed by Alfa-Bank, its feature is the ability to receive notifications on a mobile phone, by e-mail or on a pager about account transactions and market events
« ALOR-TRADE” - this program is for Alora clients. Its developers have focused on the availability of technical analysis tools and ease of use of the system
« ONLINE BROKER"- a product of VTB-24, which replaced the development of Guta-bank (on the basis of which VTB-24 was built) - Remote Trader. The appearance is somewhat different from the usual for most users of Internet trading programs - it does not have a multi-page interface
Z-trade- developed by IC Zerich Capital Management. The company claims that it is acceptable for both beginners and professionals. But users note that it is very demanding on system resources.
SMARTTRADE- "IT Invest" offers basic and simplified versions of the Internet trading program. It allows you to create your own stock index and subsequently trade the whole package, like a regular share.
* THIS LIST IS COMPILED WITHOUT TAKING INTO ACCOUNT most of the characteristics of the presented programs and IS NOT A RATING of popularity/reliability/functionality
