Frierson Consulting

Direct access trading, as the name implies, is a system wherein a person can perform direct trades with other person(s) without the interference of a broker. This is the most preferred system of trading used by day traders and the success or failure of such a method of trading depends on how fast the trade is executed, though such a system may not be necessary for an average investor.

The very nature of online trading means traders must compete amongst themselves which means that they need to have the very best of tools as well as be able to trade at high speeds. A direct access trading system will give the trader opportunity to trade in stocks or in other instruments related to financial dealings without the presence of a broker in between, but with a market maker, or a specialist, or even through immediate execution of order.

Since there is no broker involved you, as a trader, can save precious minutes. Even though such advantages of direct access trading exist, it must be mentioned that the order execution system may be rather unequal since there is much difference in relation to speed as well as accuracy of execution as also in how much commission is to be paid for every trade.

Some salient features of direct access trading include level II quotes, electronic communication networks, market makers, and fees as well as commissions. In fact, as a trader, you may be surprised to learn that direct access trading can cost you more than what you would pay if you were to use an online broker.

Even though there are many direct access trading systems available and many systems are well recognized, there is however a state of flux in this industry and there is always the risk that these systems of today may become “has beens” in the trading environment of the future.