Online Trading - Concept, Features, Benefits, Drawbacks & more

There is no doubt in anyone's mind that online trading of securities including stocks, bonds, mutual funds, ETFs, and futures is now common. It's simple and quick.

Online trading is the focus of today's post, and we'll show you how it works, what it has to offer, and how to get started. When you've mastered the fundamentals and advantages of online trading, you'll be able to use your brokerage's proprietary internet trading platform with ease.

What is Online Trading?

Before the advent of online trading, traders had to call their brokerage firms and give them a 'buy' and 'sell' order. It used to be a time-consuming process that resulted in a slew of issues. There are still a few investors that prefer to do their business through the old-fashioned method.

Since the emergence of the internet in this digital era, most traders have shifted to online trading platforms. With the dashboard, you can place "buy" and "sell" orders as well as market restrictions, set a stop-loss, and check the status of a transaction. You also have access to prior investment statements as well as news about firms. For both traders and investors, online trading has resulted in lower costs.

You can enable Trading on the go by selecting any app from the list of Best Trading App in India.

Features

When you use internet trading to buy or sell a stock, your transaction is completed in a matter of seconds. In reality, a great deal happens in those split seconds that you aren't aware of, such as:

● In a database, your purchase order is recorded.

● A confirmation message is given to both parties when the buyer and seller are found to be a match.

● The regulators receive notification of the purchase and the price. All investors may see the regulatory agencies in action, which keep tabs on all trading activity.

● In the event that regulators want to look into your past transactions, your trade records are kept.

● Your broker, who sold the shares, and the broker, who bought them, each receive a contract.

● Settlement occurs after a period of three days during which the brokers must exchange the cash and stock.

● This is the final step in putting your money or stock into your hands.

Benefits

Here are few major benefits of Online Trading in India -

Middleman is eliminated: Since there's no broker involved, you can purchase and sell without ever contacting him or her.

It's less expensive and quicker: Trading through a broker is more expensive. When trading online, a brokerage fee is assessed, but it is always less than what a traditional broker, who must physically place a trade, would charge. Instantaneous online trading is a reality.

It gives investors more power over their money: Having more control over your finances is one of the most essential advantages of online trading. There are no restrictions on when you can trade online, and you can do it without the broker's intervention at all.

It is possible to keep an eye on your investments in real time: It's easy to keep track of how your investments are doing and to conduct your own research using the advanced tools and interfaces available on your online trading platform. When you check in from your phone or computer, you'll be able to see your current profit or loss in real time.

Disadvantages

Investing in financial products and services on the internet has both advantages and drawbacks.

Hidden Cost - Although the brokerage cost is reduced, other facilities are forced to pay a higher price. A lot of rounding up is required here. In order to place an order, you must phone your broker, who will charge you two or three times as much as if you do it online.

Technical Knowledge - People who aren't familiar with computers and the internet will need to devote a significant amount of time to learning how to use the trading terminal.

System Error - The website, internet, computer, server, and trading terminal can all have issues from time to time, making it difficult for traders to conduct business.

Trading losses are enormous when the mechanisms or systems fail due to a slow Internet connection.

Limited Knowledge

● The removal of a broker could lead to complications of some sort.

● As a result, failing to seek out professional investment advice could result in significant financial losses.

● During a bull market, every action you make reaps rewards, but when the market shifts gears, it becomes much more difficult to make it through the stock market.

Conclusion

After carefully following the above procedures, you will be able to trade effectively in the stock market. As soon as feasible, start investing because there is no ideal time to do so.

After deciding on a stock, contact your broker to begin trading. Before making a decision to buy or sell a stock, do your homework.