Online Share Trading

By TBS Team | May 18, 2024

Online trading is presently one of the popular methods of making transactions online. Brokers have started using online platforms for providing all kinds of financial instruments like stocks, commodities, bonds, ETFs, and futures.

Traditionally, when a client wanted to invest money in stocks, they had to call their brokerage firm and were asked for putting in a request to buy stocks of a given company for a specified amount. The broker would then let the client know the market price of the stocks and would confirm the order. After the users confirmed their trading account, the broker’s fees and the time required for the order, the order would get placed on the stock exchange.

When a user places an order to buy any stock on an online platform, the order gets saved in the database of the trading member platform and the exchange platform. In case the price matches the user’s demands, and they confirm the order, then the process is validated by both parties. Online platforms provide a better and more inexpensive experience attracting many traders and investors.

These platforms have taken over the entire trading landscape because of the following advantages:

  • The users can open, manage, and close accounts sitting at their homes, working on a device with the internet.
  • Transactions can be made quickly.
  • Multiple financial products can be bought or sold online, which also reduces the role of an intermediary and saves time.
  • The money used is real and the clients get to analyse and choose from the various options of stocks and the available products.

Working on Online Trading

When an investor places their order to buy any stock on an online platform, their order gets saved in the database of the trading member and the exchange platform. This data is further used across all platforms selling that stock and displaying the result with the best price available.
When the price matches the user’s demands and they confirm the order, the process is said to be validated by both parties. After all these, the broker gets three days to complete the settlement of the money. After which, the money is transferred to the client’s account.

Several online trading platforms provide analysis of stocks, which helps users find the stock market’s status. This helps predict the situation of stocks in the upcoming days and shape decisions. Online platforms grab the attention of users through ease of use and reduced commission fees. Hence, a properly funded account is essential to execute trades smoothly.

Offline vs Online Trading

  • As online trading is increasing its roots in the modern market, traditional trading finds its place in local stock exchanges and offices. The impact of online trading has been noticeable with the evolution of the Internet, in the past two decades. It provides several advantages which are difficult to achieve offline.
  • The cost of stocks has reduced significantly. Online platforms provide a better experience that attracts most traders and investors. This has become possible because this form of trading eliminates brokers. This, in turn, decreases the extra price of commissions over these products.
  • Online trading is faster as compared to offline trading. Also, it is easier to find the price of securities when the information is flowing electronically. Receiving updates regarding price changes in the form of price alerts makes it easy to share transactions, thus, saving time. It also enables buying shares from any location in the world and it is not necessary to go to a definite place to trade.
  • Online trading platforms are surplus in number, and the competition between them results in a benefit for the investor. These platforms release offers and discounts for better marketing and to gain greater users. This enables the users to buy shares at lesser prices or sell them at higher prices, ultimately, benefitting the users.

Best online share trading platforms

  1. Zerodha is presently the largest and most popular broker offering online discount brokerage services to invest in Direct Mutual funds, Equity, Currency, Commodity, and IPOs.

It is the best stockbroker currently. They offer an excellent online trading platform, charge extremely low brokerage fees, and are the most transparent stockbroker.
Continuous improvement and innovation made them the fastest-growing company, following are the key strengths of Zerodha:

  • It is the largest stockbroker with active clients, market volume or new customer acquisition.
  • Considered one of the safest, most reliable & trustworthy brokers.
  • Offers the most advanced tools for online trading.
  • Charges 0 brokerage fees for Equity Delivery and Mutual Funds.
  • Offers good leverage on intraday trading.
  • Suitable for all kinds of investors including – active and passive investors or beginners and active traders.

This firm is the most technologically advanced stockbroker in India. It has built trading software – Zerodha Kite (web and mobile trading app), Coin (mutual fund investment platform), Varsity (investor education program), etc.

It is safe for investment because:

  • The ratio of complaints to active clients is among the least on the exchange.
  • A zero-debt company.
  • Does not offer Margin Funding or do proprietary Trading with client funds.
  • Does not keep client securities in the pooled account.
  1. Upstox is India’s tech-first low-cost broking firm providing trading opportunities at unbeatable prices. The company trades on different segments such as equities, commodities, currency, futures, and options available on its Upstox Pro Web and Upstox Pro Mobile trading platforms. It is backed by a group of investors that includes – Kalaari Capital, Ratan Tata and GVK Davix.

Their trading platform offers trading, analysis, charting and many more rich trading features. This makes it easier for clients to place orders through mobile phones and web browsers. The trading platform for this company is built on Omnisys NEST OMS (Order Management System) and RMS (Risk Management System). Trading in Equity F&O, Intraday, Commodities and Currency Derivatives is available through Upstox Pro which is the paid service of Upstox for traders.

Online trading is electronic trading with the help of the internet and computers. The users can search for stocks available on different exchanges and decide on the broker who offers the best price and an intuitive trading experience.

They can choose a trading platform and start placing various types of share trading orders. The order for stocks is stored in a database which after verification from the buyer or seller, proceeded with the transaction of money. These platforms provide several offers for marketing and gaining users, eventually benefitting them. Reduction of cost of shares, reduced role of brokers, increased competition among brokers, etc. are certain consequences of online trading.

Disclaimer: This blog is written for educational purpose only. Data, Securities, Advisory and Quotes mentioned here are for guidance only. Doing research by investors itself is highly recommended.

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