What Is Online Trading – Benefits of Online Trading
Just as the name indicates online trading is the ability of an investor to buy and sell stock, bonds, mutual funds and futures via the Internet. Before the Internet when an individual was interested in purchasing stock he would either call their broker or stop by their local brokerage office to make a trade. Today these brokerages have set up shop on the Internet, and all the transactions are done online.
Online trading in India is the investment activity on the Internet that does not involve the direct participation of the broker. There are many great online trading portals in India with online trading platforms for the actions of the big houses like the National Stock Exchange and Bombay Stock Exchange. The portions of total online trade in India were found to have increased from only 3 percent of total turnover in 2003-04 to 16 percent in 2006-07. This number has almost doubled in last decade.
The investor must register with online trading company and negotiate different values in the terms and conditions listed below in the Agreement that he signed with the company. Order processing takes place at the right time on the servers of online trading portal that are connected to the stock exchange and banks designated in the day. You can also obtain updated information on trade and check the status of their orders via e-mail or via the interface. Brokerages also provides the research content on their website so that customers can make their own decisions on stocks before investing.
Product and Services of Online Trading in India
Main products and services of online trading in India are stocks, mutual funds, life insurance, equities, general insurance, loans, securities trading, commodities trading, portfolio management and financial planning.
Process of Online Trading in India
After the introduction of online trading systems is very easy to do online trading with just a PC and an Internet connection. Everything you need to do is open a Demat account and trading account with a Depository Participant or DP. DP is connecting Depository to investors. DP is connecting Depository to investors. Depository is the person who stores shares in electronics form In India, there are two depositories, NSDL and CDSL.
Most banks and brokerage firms provide the online trading account and Demat account. To open a Demat account you need a lot of things such as PAN card, proof of address, bank account, etc.
Benefits of Online Trading
There are multiple benefits associated with online trading. Some of them are mentioned as follows:
Volume: Since online brokers charge a very minimal, you can trade any volume of stocks online through the Internet. Buying and selling of shares are just a click away from you.
Commission Rate: The commission rates are also very low. However, you will have to search the best broker that would charge less and provide good services at the same time. You can read customer reviews on the Internet before choosing one. Make sure to collect all the information from several reputed online brokerage companies and their services. Go for the one who charges less commission and offers more services. Since both trading firms and brokers play a key role in your investment plan, therefore, it is important to search the most credible and reputed company for your financial investment.
Time: One of the most favorable factors of online stock trading is the time that is required to accomplish the trade. Once you have an online account with a stock trading company, you can buy and sell stocks from the comfort of your home or from your mobile. Unlike the traditional trading systems, you only need to click a few mouse buttons, and the transaction is done within few minutes.
Management: Unlike traditional brokerage house, online brokers always remain in contact with you. Therefore, without your approval they cannot buy and sell stocks. In addition, they also keep you updated with the market news and other stock related information. These qualified brokers also keep an eye on major company shares and advice you to buy them to get the maximum from your investments.
Portfolio: With online trading, you can keep your portfolio small. You can invest a little amount or a large amount online; you are free to invest and there is no limitation. You can invest in a small amount of share as per your need. For novice, it is advisable to start with small investment; later, you can invest more.
Knowledge and Information: When you open an account with an online brokerage firm, you get several services from the company to help you with your investment plan. You can get access to all the information related to the stock market, for example, stock quotes, leading company share and other various trading stock options, which are crucial if want to make most of your investments. Using all this information, you can make a well-informed investment decision.