Advantages Of Online Trading

Online Trading

Trading platforms are various portals which people use in order to manage and access their trading accounts for their financial markets. These trading platforms are provided by brokers in exchange for a certain amount of fees. These have been the key to opening up online trading and e-trading.

Advantages Of Online Trading

1. Online trading enables a person to conduct trades at his/her convenience as long as they have a stable internet connection. The only condition being that the trades are entered into during the market hours that is 9:15 to 3:30, on weekdays. The customer need not interact with the broker in any way to start his/her investment journey.

2. Its more cost efficient and faster - When you trade in a traditional way and the broker initiates your trades, they charge a higher fee in comparison to the fee charged when you trade on the online platform by yourself. Online trading is also instantaneous in nature. The whole process of calling or going and meeting the broker to conduct a trade, is fully eliminated, thus making it possible for more and more young working people to engage in investments in share markets. 

3. The investor has more control - The customer has full control of when and from where he can trade, during the trading hours, without any interference by the brokers. The investor can easily view all the options that he has instead of just relying on the broker for a few choices of shares where he/she can put their money. 

4. The investments can be monitored in real time - You can see your real time losses and gains whenever you want and you can also use the tools provided on the site, to conduct your own research.

5. The chances of an error occurring due to miscommunication is next to nil as you are the one conducting your own trades.

6. Online trading allows you to experiment with various types of financial instruments like derivatives, commodities etc.

7. It is very convenient in nature. You just need 15 minutes to open your account and then you're good to go. It saves a lot of time and there is minimal hassle.

8. Online trading helps a person become more responsible and helps a person understand his/her finances better. There are many tools on the online trading platforms that help a person analyze their own stocks which will help a person predict the market sensitivity towards a stock. Trading in the market by yourself will make you more financially independent and help you increase your knowledge in this field.
 

Also Check: What is Online trading

How does online trading work?

Nowadays we are so used to our trades taking place in mere seconds that we don’t stop to think what happened over these few seconds. Numerous operations take place within the span of these few seconds -

The order is registered

Then the order will be placed in a database

After this, a buyer and seller are matched, and a confirmation message is sent to both of them

The regulatory bodies are also notified about the price and the order. The regulatory bodies keep an eye on the trading activities taking place

All the transactions undertaken by the individual is stored in case the regulator wants to review the transaction history

After this the broker of the person who sold the shares and the broker of the person who bought the shares, are sent a contract

The brokers then have 3 days to settle

After this whole process is over, the money and shares are reflected in the respective accounts

Differences between online and offline trading:

In offline trading, all the transactions are done through a broker but in online trading, all the transactions that take place are by the individual themselves and at their own will and the hefty amounts of brokerage have also been brought down. In online trading, all the access lies with the investor himself whereas in offline trading, the broker will carry out trades on behalf of the investor. 

We cannot say for sure which one is better because both ways have their pros and cons, and it is different for every individual.