Benefits of online trading.


  • Benefits of online trading:

    • It eliminates the middleman:
      You can buy and sell without even speaking to your broker. This makes online trading alluring for someone who does not have the finances to work with full-service brokers.
    • It’s cheaper and faster: When a broker executes your trades, it costs you more money. On the other hand, when you trade online, a brokerage charge is levied but it is always less than what a traditional broker who has to place a trade physically, would charge you. Online trading is almost instantaneous.
    • It offers greater investor control: One of the most important advantages of online trading is that it gives you greater control over your investments. You can trade whenever you want with online trading during the trading hours and you can also take your own decision without any interference from the broker.
    • You can monitor your investments in real time: Your online trading platform has a lot of advanced tools and interfaces to monitor your investing performance and to do your own research. You can see real time gains or losses whenever you login from your phone or computer.

    How does online trading work?

    When you buy or sell a stock through online trading, you order gets executed within seconds. But, within these seconds lots of operations take place which you are unaware, such as:

    • Your order is registered.
    • Your order is placed in a database
    • It searches for a for a seller and when both buyer and seller is matched, a confirmation message is sent to both the parties.
    • The order and the price are reported to the regulatory bodies. These regulatory bodies look over all the trading activities and are displayed to all the investors.
    • Your trading records are stored in case regulators want to study your past transactions.
    • A contract is sent to your broker who sold the shares and the broker who bought them.
    • After all this, the brokers have 3 days to exchange the cash and shares which is called settlement.
    • After this process, the money or the shares are officially in your account.

    How do you trade online?

    • Researching and Choosing a Stock: You should perform value research, technical analysis, try identifying patterns, understand short selling etc.
    • Choosing a Brokerage Partner: You can see this article to learn how to choose the best broker.
    • Learning to Trade Stocks: You can learn to trade through a trading account and a demat account easily.
    • Making Smart Investment Decisions: Try to decide which stocks you can afford to trade, diversify your portfolio, research before you invest and buy good stocks at a low price.

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