Some pros and cons of online trading account in India:
With online trading, traders make all their decisions themselves. Such an approach differs from using a stockbroker, as the broker typically offers input and advice. Regardless of how you trade, there’s always risk. Here are five advantages and disadvantages of online trading.
5 benefits of online trading
- Lowest brokerage fees (Cheapest brokerage fee, Discount brokerage):
One of the clearest advantages of online trading is the reduction in transaction costs and high fees associated with traditional brick-and-mortar brokerage firms. Typically, you’ll pay between 0.005% and 0.02% to buy and sell stocks and exchange-traded funds at online discount brokerages, according to a Bloomberg report.
- More control and flexibility:
Time is often of the essence when you trade stocks, so the speed of using online trading portals is a benefit to many investors. With online trading, you can execute a trade almost immediately. Traditional brick-and-mortar brokers might require appointments, either online, over the phone or in person, just to initiate a trade.
- Ability to avoid brokerage bias
By taking trading into your own hands, you can eliminate brokerage bias. Bias sometimes occurs when a broker gives financial advice that benefits the broker — such as in the form of a commission for selling specific mutual funds and other products.
- Access to online tools
In the world of online trading, a lower cost does not necessarily mean a shoddy product. Many of today’s online trading companies offer customers an impressive suite of tools providing valuable information and helping optimize trades.
- Option to monitor investments in real time
Many online trading sites offer stock quotes and trade information that make it easy for people to see how their investments are doing in real time.
5 disadvantages of online trading
- Easier to invest too much too fast
Because online trading is so easy — you basically push a button — there is the risk of making poor investment choices or overinvesting.
Online investors can protect themselves by understanding the stocks they are buying and setting up safeguards in fast-paced markets. Placing a limit order on your account is one way to control what you buy and how much of it.
- No personal relationships with brokers
From getting help on how to create an investment strategy to understanding how the results of feedback mechanisms affect the market, online traders are left to their own devices. For some, this kind of autonomy can be unsettling.
Experts often stress the importance of research, particularly for new traders. You need to learn as much as you can about the companies in which you invest.
- Addictive nature
Online traders can experience a certain high when trading that is similar to what people experience when gambling, according to a recent study on excessive trading published in the journal Addictive Behaviors. The study noted that some investors choose short-term trading strategies that involve investing in risky stocks offering the potential for large gains but also significant losses. “The structure itself of the two activities (gambling and trading) is very close,” the study concluded.
The nature of online trading means that, ultimately, you’re at the mercy of your internet connection. If the internet connection is too slow or is interrupted, you can lose out on a potentially important or lucrative trade.
- Buying errors due to computer missteps
With online trading, to simply assume a trade was not completed can cost you money. Investors who believe their trade was not completed might make the trade again and end up investing twice as much as they intended. Assuming a trade was completed without seeing confirmation of the fact also is a mistake. Make sure you understand how to verify trades and review statements before you begin using an online investing system.
Is online trading safe?
Experts also state that online trading is as safe as offline trading as the financial transactions are always protected. Having said this, it can also be said that nothing in our world is safe. … If you are one of those who frequently trade in stocks online, it is important to know as to how you can make e-trading safe.
What is an online trading account? & How does it work?
Stock in companies that re-invest their profits are growth stocks. Brokers buy and sell stocks through an exchange on behalf of their clients, charging a commission to do so. A broker is simply a person who is licensed to trade stocks through the exchange for their clients
10 Great Ways to Learn Stock Trading as a New Investor:
- Open a stock broker account. Find a good online stock broker and open an account. …
- Read books. …
- Read articles. …
- Find a mentor. …
- Study the greats. …
- Read and follow the market. …
- Consider paid subscriptions. …
- IMPORTANT – Be careful.
5 Steps to Start Trading Stocks Online
- Decide if this is the right strategy for you. You might consider trading stocks if:
- Get an education. Before you trade anything, learn everything you can about investing and the markets.
- Select an online broker.
- Start researching stocks.
- Make a plan and stick to it
- The bottom line.
Online trading has a lot of benefits, check the few of them
It is convenient
When it comes to online trading, you only need to open a trading account via internet and you’re good to go. You’re not bound by time and place as long as you have an internet connection. Hence, online trading is convenient and accessible from anywhere with limited hassle. It also saves time.
It is cheaper
In online stock trading, the stock broker fee which you will have to pay is lower when compared to the commission charged by traditional method. If you trade in a sufficiently large volume of stocks, it is possible for you to be able to negotiate your broker’s fees.
You can monitor your investments anytime
Online trading allows you to buy or sell shares according to your convenience. It offers advanced interfaces and the ability for investors to see how their money is performing throughout the day. You can use your phone or your computer to evaluate your profit or loss.
It almost eliminates the middleman
Online trading allows you to trade with virtually no direct broker communication. Apart from reducing the overall trading cost, this benefit also makes the trading hassle free, making this service much more lucrative.
Investor has greater control
Online traders can trade whenever they wish to. On the other hand, in traditional trading, an investor may be stuck until he or she is able to contact their broker or when the broker is able to place their order. Online trading allows nearly instantaneous transactions. Also, investors are able to review all of their options instead of depending on a broker to tell them the best bets for their money. They’re able to monitor their investments, make decisions and buy/sell stock on their own without any outside interference; thus, giving them greater control over their investment.
Online banking is fast and efficient. Funds can be transferred between accounts almost instantly, especially if the two accounts are held at the same banking institution. All it takes to be able to buy or sell stocks is a single click of the mouse. Through this, a quicker exchange can be made which may also ensure quicker earnings.
Better understanding of one’s money
This is a hidden advantage of online trading which you wouldn’t want to pass up on. Just like conventional stock trading, you can predict the market behavior and use this to predict a rise or fall in price of the stock. You’ll be handling your own finances and be responsible for them. Over time, you become more experienced in understanding the market, and good investment opportunities from the bad ones. This knowledge about money is very useful, and having this on your resume makes you more marketable to companies looking to fill a well-paying position in the finance department. So while making a quick buck, you also manage to become financially smarter, in both your professional and personal life.