Presently, online trading of shares has become more than the norm rather than the exception. This is because more than 20% of the total trading in the market and 50% of the retail trades are accounted for by online trading platforms of shares. It is the execution of capital market orders on the internet where the clients can place, execute, and monitor orders using a PC or laptop or even download the app onto their mobile.
Online share trading demands executing orders on the internet. With this mechanism, traders can buy shares, sell shares, modify orders, etc., and not just equities covered by online trading. Once an online share trading account is opened, people can trade equities, ETFs, futures, options, currency futures, and currency options, all under a single platform.
The most important thing about online trading is not the technology or speed it offers but the fact that it puts its customers at the centre of the entire piece. This makes online share trading so unique. The customers form the nucleus of the whole trading activity, where the fundamental importance of online trading comes in.
Highlights of Online Share Trading
- In online trading, once the account is activated, clients need an online trading username, password, and second-level authentication to start trading. They can access the online trading account on their PC, laptop, smartphone, and notepad or even download the app.
- Online trading is all about gaining greater control over the account. The clients place the order and take accountability for its execution. In online trading, people do not depend on a trader or a dealer to execute orders on their behalf. Online trading provides total and absolute control over the entire process from the end from placing the order to modifying and monitoring the order.
- Typically, brokers offer a lower brokerage on internet trading since most of the tasks are done by the clients. The broker does not require to maintain front office infrastructure, a back-end call-n-trade facility is good enough for online traders. These cost savings are passed on to the clients.
- Online trading of shares is a kind of anywhere / anytime kind of trading model. It would not matter whether the clients are in any part of India or even the world.
- They can still access the trading account over the net from anywhere and execute trades. Most online trading platforms allow placing orders at night and the execution happens the next day.
- This kind of trading is menu-driven and at the click of a button. Clients or customers can place the order at the best price or even place a limit order or market order depending on what is best suited to the condition. If the order is not yet executed, they have the liberty to modify the price or quantity and check the updated status of the same in their order book and trade book. They might even cancel the order if they change their mind, assuming that the order is not yet executed. However, once it is executed, the order can only be revised using the account.
- Interestingly, share trading online is impersonal and hands-off but very transparent. The clients can see the bids and prices right in front of them. The order status can be checked – whether it is executed or not, on the screen and the best prices. They can also verify the trades in their trade book and look at orders and execution details. Hence, online trading can be considered a transparent methodology for executing transactions in the capital markets.
- Online trading is also about research ideas and screeners that when put together empower the platform. The tools help the clients to perform better and more seamlessly and thus provide a better trading experience.
Benefits of Online Trading –
An online trading platform can be used to execute a buy or sell shares within seconds. People can trade online with minimum effort, whether stocks, bonds, futures, options, or currencies. These platforms are usually provided by internet-based brokers.
Some of the benefits that have made online trading popular and beneficial are:
- Online trading is the most convenient method of trading where the clients can buy or sell shares from a remote location. It is time-saving and convenient. Here, the brokerage fee charged is lower as compared to the commission charged by traditional full-service brokers.
- Clients can monitor their investments remotely. These platforms offer advanced interfaces and options for investors to see how their money is performing throughout the day.
- It eliminates the middlemen and allows customers to trade independently, without a broker’s interference. Besides reducing the overall trading cost, this also makes the trading hassle-free, making this service much more lucrative.
- Investors have greater control while using an online trading account. They can place the orders at their will.
- This form of trading allows instantaneous transactions, and the investors can review all their options instead of depending on a broker.
- The major advantage of online trading is it provides more awareness of the financial markets. It also helps build a habit of being personally involved in money management and avoid the misuse of funds by a third party.
Dynamic changes in the stock market have been altering traditional systems over the last decade. The factors behind this change are:
- Online trading of shares was the new way to the market for investors. Hence, it gained immense popularity. The efficiency and accessibility of online trading are attractive.
- The emergence of online trading liberated traders and investors from their dependence on brokers. It has made market research outputs readily available to consumers. This has, in turn, helped the consumers to take their own decisions.
- Information is updated in real-time and is available to traders through apps or websites. This information reduces the time difference between market activity and the time it takes traders to know about it. This has added to the popularity of online trading.
- Long-term investments have always been profitable, but due to gradual changes in market elements and the nature of the market and trading processes, short-term investments have reaped more profit. Online trading is best suited for short-term and quick investments because of the ease of operation, the last time-lapse, and real-time motoring.
- Capital markets are an ever-evolving space that has elements being added over time. The growth of online trading has made the markets more dynamic. This reflects even in the economies of different nations.
Stock trading is a great way to earn money. Despite involving a certain degree of risk, it can be a rewarding and exciting experience. It enables an individual to plan their investment from the comfort of their homes. This online mode of investing eliminates the major hassles of investing since all that is needed is an online Demat and trading account.