What is Online Trading?
Online trading is basically the act of buying and selling financial products in stocks. Through an online trading platform. The trader buys and sells using an Online trading platform is normally provided by internet-based brokers and are available. Trading To every single person who wishes to try to make money from the stock market. These are Online trading in bonds, stocks (shares), futures, international currencies, mutual funds, ETFs, and other financial instruments.
Trading in the stock market has become less time consuming these days as you can trade all by yourself without the assistance of a broker by means of trading. The Online Trading Most brokers, like iFOREX, provide a variety of financial products including Shares, Commodities, Indices, and Forex. While shares like Google or buying and selling Commodities. Like Gold or sliver might be quite familiar. Forex trading has gained extreme popularity over. In the last couple of years due to some of its major features trading.
The use of online trading increased dramatically in the mid to late-90’s. With the introduction of affordable high-speed computers and internet connection. Just like shopping for online groceries, you can buy and sell stocks you need not be an expert in being Exchange. These trading platforms are user-friendly and do not necessitate any special learning. Online trading platforms serve as a hub with multiple tools for investors or traders.
You can place trade orders or cancel orders at your will from the comforts of your home. It allows you to make your own decision with regard to trading without any interference from the broker. you can buy shares or invest in IPO or buy mutual funds as well. Traditionally, investors and traders have to call their brokerage firms to make a trade for them. If Harry wanted to purchase 50 shares of Intel, he would call his broker with a buy order request. The broker would let Harry know the market price and confirm the purchase order.
If the investor is making a limit order. The broker has to confirm the limit price, how long to keep the order open for, what account to purchase the share in(if Harry has multiple investment accounts), etc. Most people trade online through an online trading broker. An online broker is a brokerage firm that offers its services on the internet. Unlike a traditional broker. The investor does not meet the broker face to face or via the Phone. Everything happens on the WEB.
Benefits of Online Trading:
Advantages and Disadvantages of Online Trading:
- Online trading gives a lot more control over the trade to the customer. You can place the order online. Monitor the order online and also close out the order online. The profit and losses are automatically adjusted to your trading account.
- If there is a market opportunity, investors can make a decision and get real-time stock trading without having to call or visit the broker’s office.
- An easier and convenient way to own shares
- Immediate transfer
- Zero stamp duty on transfer of shares.safer than paper shares, e.g., fake signatures, delay, thefts, etc.
- Lesser paperwork for transfer of securities. Fewer transaction costs.
- No “odd” problems. Even a single share can be sold.
- Trading tips and trading research can be disseminated through online trading. Account itself so that you do not need to access multiple sources for your research and execution. They can all happen under a single platform itself.
- It is easy to open and manage your account online. Investors can access their accounts online 24/7
- Online trading is secure and can make a lot of money if you use it smartly and carefully.
- Investors, who are trading for the first time, go with the flow and get immersed in technology and actually temporarily to get that they are actually using their real money.
- Sometimes, the Internet connection can be a problem or the website itself loads very slow.
- There is no relationship that of a mentor between a professional broker and an online trading account holder. Thus leaving the investor on his own to make choices of the right shares.
- Investors may incur a loss due to mechanical or platform failures.
Online Trading Rules:
The stock world provides various opportunities for your money to grow. You can trade or invest in the market as per your wish and need. People who want to become profitable traders should spend only a few minutes. Online before reading such phrases like “plan your trade, trade your plan” and “keep your losses to a minimum”. You need not meet the broker to place your trades as you can trade all by yourself through online trading platforms. With mobile trading apps, it is easy to place orders anytime from any part of the world. Let us know about the 10 rules of investing in the stock market.
- Never deal with registered brokers/intermediaries. When trading or investing in the stock market, you have to be very careful in choosing the broker. Check the background or the reputation of the broker opening an account.
- Never take decisions based on rumours. Your decisions must be based on paper research. You have to be in touch with the markets all the time to know which factors affect the market and in turn your stocks.
- Choose the right stocks you have to select highly liquid stocks. otherwise, you will be stuck in your position and will face losses.
Take calculated risks You have to take a risk in accordance with your risk potential.
- Don’t be greedy as a trader, you should not be in a hurry to make more money in a short span of time.
- Never be emotional be practical and have a realistic expectation. Don’t ever make decisions because of emotions.
- Do thorough research always do a proper study of the companies, their balance sheet, future business potential, and the global and national factors that would affect the company’s revenue or images.
- Use stop-loss is one of the best ways to reduce your loss and thereby retain the gains you have made.
- Hedge your positions any economic or political event may shake the market. Therefore, it is important to hedge your position.
- Redressal of grievances you must not hesitate to approach the concerned authorities in case of any grievances.
What is a Trading Account?
A trading account is necessary to buy or sell shares in the stock market. Previously, the stock exchange functioned on the open outcry system. In this, the traders used hand signals and verbal communication to convey their buying /selling decisions. Your trading account ats as a link between your bank account and your Demat account. A Demat account is one that holds your shares in electronic format. In the Online method, the buyers and sellers don’t have to be physically present at the stock exchange to place orders. Instead, they open a trading account with a registered stock market broker, who conducts trading on their behalf. Each trading account has a unique trading ID that is utilized to perform online transactions.
How to open a Trading Account:
Trading account in order to conduct equity trading online, you need to open an online trading account with a stockbroker. Amongst thousands of clients, the broker may find it difficult to give your personal attention.
You can open a trading account by following these steps:
- Select a broker who has a good reputation for executing orders in a timely fashion. This is necessary to tap the opportunity at the right time.
- Every broker levies a certain fee to process your orders. So, it is better to draw a comparison of brokerage rates across the region. These are Also, enquire about the discounts available to enjoy better services at reasonable rates.
- Find a brokerage firm and enquire regarding the procedure to open a trading account.
- A representative of the firm will visit your house with an account opening form and the Know Your Client(KYC)form. You need to fill these two forms and attach the relevant documents with them.
- After the submission, the firm will verify your personal details. Either through an in-person check or over the phone.
- Once your application is processed, you will be provided with details of the trading account.
What are the documents required for a Trading Account?
An open trading account is an easy process that can be done in just 15 minutes. The trading account acts as an interface between an investor’s Demat Account and saving bank account. The trading account opening procedure and the mandatory documents required are similar across organizations. Before submitting any document having an expiry date, ensure that it is valid on the Submission Date.
- Proof of Income
- A photocopy of the Income Tax Return (ITR) Acknowledgement slip submitted to the Income Tax Department during tax filing.
- Salary Slip of the current month or Form 16.
- The Latest statement of a bank account containing the income history of the last 6 months.
- Proof of Identity
- PAN card having a valid photograph.
- Aadhaar card / Voter ID card / Driving license / Passport.
- Proof of Address
- Passport / Voters Identity card / Ration Card / Driving License / Flat Maintenance bill.
- Bank passbook which is not more than 3 months old.
- Utility bills like Electricity / Gas Bill which is not more than 3 months old.
- Proof of Income
Best Online Trading Account :
- Research reports and recommendations by experts
- Customized investment solutions
- Professional Financial Advisors
- World-class trading platforms
- Pan India presence
Advantages of Trading Account :
You may find multiple exchanges in India which trade in different securities and commodities. Some of the leading exchanges are the National Stock Exchange(NSE), Bombay Stock Exchange(BSE), National Commodity and Derivative Exchange(NCDEX), and Multi Commodity Exchange(MCX).
Shares buying and selling :
With a trading account, you can buy and sell shares. The online trading account helps you to trade at a faster speed. Placing orders, monitoring portfolio, creating a watch list, etc.
3 in one account :
You can trade-in equity, Commodity and also invest in mutual funds using. One single account without any hassles.
Experience tension-less trading using high-speed online trading platforms.No delays and no worries as it is the safest and secure way to trade.
Online trading has made the procedure of fund transfer and conducting equity trading very seamless.
The difference – Online Trading vs Offline Trading :
Online trading vs offline trading has various ways of differentiation. Both kinds of trading styles have their pros and cons and suit different kinds of traders and investors. After inter invaded the market. Share trading is carried through online mode. Before that, the same was carried through the assistance of brokers.
Today, both online and offline share trading is prevalent but offline has gradually taken. Backstage for a number of good reasons. There are various factors that have played a detrimental role in the emergence of online trading.
Ease of trade :
In the case of online trading. You may carry on with trade activities as per your own will you need not depend upon another individual to get your job done. All you need is a laptop / mobile phone and a good internet connection to initiate online trading activities.
In offline trading. All sorts of activities related to trading need to get routed through a broker in person. These are Offline trading requires every trade whether it is a buy or sell decision to go through the broker.
Save Your Money :
The operating and maintenance cost for online trading platforms. The sites/portals are relatively lower as compared to the cost of setting up branches and recruiting staff in offline trading.
The lesser trading fee charged in an online trading account is an attractive factor for the potential investors around.
As per the recent report generated online trading has been reported. To be much more beneficial than an offline form of trading. It really a profitable deal as the fee charged by online brokerage are less in comparison to that of others.
On the other hand, in online trading, the client executes. The trades themselves ruling out the need for middlemen. Therefore, the fees charged in online trading are relative. These are much lower compared to the tat of offline trading.
Online trading is much more secure as the individual trader has complete control over transactions made.
In offline trading, on the other hand, brokers may carry out transactions. On behalf of the client without the knowledge of the client.
Grab Real-Time information:
Online trading account services and mobile apps let you grab the update and real-time information about stocks and other investment opportunities. You get regular and timely updates to manage your portfolio effectively.
Limited information in offline trading restricts the stock traders in taking timely decisions. Keeping a minute to minute track of stock prices and then informing the client is not so simple.
Prevention of frauds:
An online trading account provides better control for your transactions and reduces the chances of fraud. Whereas, in offline trading, you are solely at the mercy of someone. That may be leading to funds and mistakes.
Although, SEBI is alert and strict and regularly monitors. The trading and investing activities very closely. Then Online trading account scores quite better when it comes to the safety of your transactions.