Why you need to start Trading Account online?

To carry out the trades for different types of securities in the Indian Stock Market, one needs to have a trading account and a Demat account. You will have to open a trading account with any stockbroker of your choice. You can choose to either carry out trades through the offline method or the online method. You need a broker to trade no matter what. It is a mandatory requirement as per the rules and regulations prescribed by the market regulator in its guidelines. The reasons to start using a trading account online are essentially very simple. It gives you complete control over all your finances and helps you make a quick and informed decision.

Online trading in the current age is a highly popular as well as a convenient means of carrying out transactions in financial assets. The method is handy in trading for various kinds of financial securities in the share market. The most prominent reason for this is that one can open an online trading account within a few minutes. All you need is to find the right broker for you, fill up a form, submit documents, and get done with the eKYC process. Once you’re done with these formalities, you can trade in the Indian stock market. Most financial institutions traditionally provided the offline facility to invest and trade in the securities in the share market. These financial institutions which included organizations such as stockbrokers, banks, etc have also started providing online facility for trading.

Advantages of Online Trading

Online trading is a great way of trading a multitude of assets available in the share markets around the whole world. Here are some of the most important advantageous reasons to start using a trading account online –

Elimination of the Middleman

Before the advent of digital trading facilities, all the work related to the stock market was completely manual. All the steps involved the necessity of a huge number of people. The investors and traders interested to participate in the financial market needed to contact those people engaged in the work. Additionally, it was not easy to deal with these people and easily trade in the stock market. There were some people who acted as links and helped conduct the transactions successfully.  They were the middlemen acting as agents. They were the ones whom the investors and traders trusted for the smooth execution of their transactions. The digital means of trading in the share market completely altered the scenario. 

The method of online trading gave the investors and traders the power in their hands. They now no longer need to spend their time waiting for the response of the middleman or those working in the stock exchanges. The traders can now take complete control of all the investments into their own hands. You no longer need to contact your stockbroker to carry out a trade each and every time.

Cheap and Fast

The stock brokers are an essential part of the financial market. They provide the facility of trading accounts which the traders use to place their buy and sell orders while trading. These financial institutions, however, charge a certain amount of fees in return for the services they provide to their customers. The charges levied by the full-service brokers are significantly higher if you choose the offline means to place your trades. This is because they execute the trades on your behalf as per your instructions. The online method of trading is a cheaper one though. The charges levied by the stockbrokers are comparatively very low. You will do most of the things when you trade online, leaving very little job for the broker to do. Hence, the charges applicable will be certainly less.

So, by trading through your online trading account you can benefit a lot. You can get rid of the huge amount of charges applied by the broker. The execution of the trades carried out also becomes faster. The trades will almost instantaneously happen, ensuring that you do not miss out on any of the profitable trading opportunities.

Provides Control

For trading online the traders will use the online trading account. They will receive a personal trading account. This account is accessible to the respective owners who have authentic login credentials. Only you can make all the trading decisions for yourself. So, having an online trading account puts you in charge of your financial decisions. You have complete control over the decision you make rather than giving it to the hands of those who are trying to gain money in the form of commission from you. This is very true about the stockbrokers and agents who charge the investors and traders with heavy amounts of chargers. It is one of the best reasons to start using a trading account online.

Monitor all your Investments in Real-Time

With the help of your trading account, you can see the live market movements. The trading accounts employ superior technology to collect all the information very fastly from all the relevant sources in real-time. Not only do they gather this huge volume of data so quickly but also provide it to the users without any delay. As the process is completely digital making use of sophisticated and advanced technologies, all information regarding your investment is available easily. In fact, you will get all the details about all of your investments and trades on various assets in one place in the trading account. You need not search at different places or platforms to know about the transactions taking place while trading. This information will extensively assist you to gauge how all your investments are doing and that too in real-time. 

How Does Online Trading Work?

The transaction of all the trades takes place very quickly when you place an order to buy or sell an asset. It happens due to the very advanced system that is in place working on a constant basis to facilitate the transactions. When the traders buy and sell their assets through the online trading accounts, the order execution takes place in a matter of seconds. It is very crucial to know that though the whole transaction completes within a very short time there is a long process behind it. So, the traders should understand the entire process involved in online trading. Here is a glance at the complete procedure carried out when you trade online.

1. Firstly, when the traders place an order, it gets registered through their respective trading accounts.
2. Your order is then placed in a database provided by that financial institution.
3. Then, the system tries to find a buyer or seller based on the order placed. When there is a match between the buyer and seller, the system will initiate the process of order execution. Before executing the order It would first communicate its information with both the buyer and the seller. Further, both the parties will receive a notification regarding the same.
4. The order you place and the price at which the exchange of the asset will take place are agreed upon. After that, it will get reported to the regulatory body, the securities and exchange board of India (SEBI) which monitors all trading activities.
5. This trading of an asset and all other trading activity carried out by you gets stored for reference with regulatory bodies. This helps the regulator that is the SEBI to keep a close eye on all the transactions taking place in the share market. 
6. A contract gets shared with the brokers of both parties involved throughout the entire transaction.
7. The Brokers have a fixed settlement period of 3 days. During this time period, they have to exchange the shares and money as per the agreed terms and conditions.
8. After this whole process concludes, you will receive the money or the shares based on your order. In case, you buy an asset by paying its price at the current market value you will receive the shares. If a trader sells a share, the share will go to the buyer who purchases it. The seller will get his due amount of funds directly into his bank account.

How Do You Trade Online?

Trading online is quite a simple and hassle-free process. The traders need to go through some steps to carry their trades online. Here is how you can trade online. Follow the steps mentioned below to carry out the trades smoothly.

Choose a Broker

The traders will require a stockbroker to carry out trades to help you open a trading account. Most of the stockbrokers provide the Demat account facilities as well. It is very crucial to pick a good financial institution for the trading account as well as the Demat account. Choosing the right broker can make a huge difference for you. All the financial institutions have some or the other difference in the kind of facilities they provide. The traders must choose the institution that is able to meet their requirements properly. Some of the traders may not want all the facilities the institution provides and others may not find them much helpful. Also while choosing the stockbrokers it is necessary to check the charges it levies for the various types of services it offers.

Researching

You must put in ample time for research to know the right stocks for you. You must choose stocks based on your risk appetite and like to gain financial freedom. It is essential that you put your trades according to your investor profile. You should not follow the strategy of others and research the particular asset yourself before making any decisions.

Learning to Trade

Trading with the help of your Demat account is pretty easy. You will learn how to trade with the help of your Trading and Demat account in time.

I hope you have enough reasons to start using a trading account online. You can make smart trading decisions by diversifying your portfolio and buying shares at a low price.

Things to Know Before Trading Stocks

To clear out your concept about “Why start using a trading account online?” properly, let’s dive into a few more things about stock trading.

Trading is an easy process. The major thing to know is that the stock market lets you own ownership of a company. It’s a place to gamble or play games. Extensive research goes into trading. There are huge amounts of money to be made with the risk of losing it all. It’s important that you are aware of your financial condition. It’s also advised never to invest all your savings if you need that money shortly. You must carry out trades based on your risk appetite without being too greedy.

Offline vs Online Trading

Before trading took place offline with the help of signs and words, further stockbrokers got involved who would trade on your behalf. Now you can trade from the comfort of your own without asking anything to do it on your behalf. Offline trading is now a thing of the past, but you can still do it. All you need is a broker who would carry out trading on your behalf. You’d have to contact him regularly for all the trades you wish to carry out, as well as know the status of your investments.

You carry out online trading without any other party being involved. It’s a great way to take control of your financial decisions. It alone should be one of the reasons to start using a trading account online. Apart from making your own decisions, you can check your investment performance in real-time. It’s more secure than offline trading as only you have access to your investments. You can also trade from anywhere on the go through the online mobile applications.

How to Choose an Online Broker

Choosing an online broker can be a difficult decision because of the various options available. You can choose a broker based on the charges he has and the services he provides. There are two main types of brokers you can choose from.

Full-service Brokers

A full-service broker provides complete information that one would require to trade. It involves thoroughly researched information on the charges of the institution and all the important news about various companies. It’s very helpful to new traders who are trying to learn how to trade and figure out the stock market on their own.

Discount Brokers

A discount broker is the one who provides discounts on brokerage making it cheaper for you to trade. They help reduce your losses, ensuring you take a majority of the profit home. It’s a great opportunity for those trying to reduce the charges applied to trading.

Conclusion

This article highlights all the major points that you must consider regarding online trading. Hope this article brings out all the clarifications to your doubts about why you need to start using a trading account online.

Frequently Asked Questions (FAQs)