Online Vs Offline Trading

Online Vs Offline trading has various ways of differentiation. Both kinds of trading styles have their pros and cons and suit different kinds of traders and investors.

Let’s have a quick look at such differences in this review.

Before the advent of the Internet, share trading was carried by stockbrokers, who used to buy or sell equities on behalf of the client. However, after the Internet became a daily part of our lives, it has become easier for people across the field to manage all their work by themselves.

Still, few clients go for offline trading owing to several reasons.

Today, both online and offline share trading is prevalent but offline has gradually taken backstage for a number of good reasons. There are various factors that have played a detrimental role in the emergence of online trading.

To understand them clearly it is very important to note the difference between online and offline trading.

Online Vs Offline Trading in Securities

In this detailed review, let’s try to understand the differences between Online Vs Offline Trading:

Trading

While in online trading, a trader can trade without the assistance of the broker, offline trading requires every trade – whether it is a buy or sell decision – to go through the broker. By assistance, we mean here active assistance such as punching the orders and other day-to-day processes.

Even with the online trading on the rise, there are broking houses that have in-house dealers, equity advisors, as well as, relationship managers who guide the client as and when they need the assistance.

However, with the advent of online trading, traders who have years of experience in the stock market gradually become self-dependent in picking up the quality stocks and putting the orders.

So basically, online trading can be easily associated with ease of trading.

Flexibility

With offline trading, there are just two options if a client wants to trade. Either the client needs to visit the office of the broker or call and trade. Our busy work schedules often do not allow us to do any of the aforementioned.

There have been numerous instances during the offline trading when the clients have missed a particular trade either due to the unavailability of the dealer at the desk or lack of communication.

With online trading, getting the order punched in at the right time has become easier.

Almost all brokers offer a trading platform on every multimedia device, allowing traders to execute both buy and sell orders from anywhere.

The interface offered for the mobile platforms might be different from that of the Personal Computer and could be a challenge initially.

However, once the trader gets accustomed to putting the orders on the mobile platform, it could be very convenient and simple.

Fee

Compared to the fees charged by the brokers for offline trading, online fees in almost negligible. In offline trading, there would be more than one people involved.

For instance, during call and trade, there would a dealer who would punch the order, a relationship manager who provides active assistance to the client and representatives who call and confirm the order executed during after market hours.

The fee imposed on the offline service includes fees for all such assistance.

On the other hand, in online trading, the client executes the trade themselves ruling out the need for middlemen. Therefore, the fees charged in online trading is relatively much lower compared to that of offline trading.

Online Research Reports

Another difference in Online Vs Offline trading comes in terms of the research a broker provides.

Broker houses offer various fundamental and thematic reports about the stocks. When online trading was not in trend, offering a variety of reports and getting hands-on one was a big task both for the brokerage houses and clients respectively.

With online trading, it has become a lot easier to offer reports and online assistance to the clients, and for the clients as well to go through those reports and take actions accordingly.

These reports and much more material can be accessed online on the brokerages’ website.

These reports help the clients to understand the sector and the stock that they should invest.

Additionally, traders also get to know the overall health of the economy. All this and more is offered to the client for their comfort helping them to do the winning trade.

Prevention of Fraud

Online trading provides better control to the client over every transaction made.

In offline trading, clients are at the mercy of the traders, giving rise to frauds and mistakes. But, in online trading, since the client executes the order themselves, chances of fraud or error is minimum.

Also, regulating authorities have put stringent regulations in place to prevent frauds.

Direct link to Bank

In the offline trade, the client had to write a cheque or demand draft in favour of the broker houses which then takes time to clear.

Delay in the initial amount, i.e., during account opening is workable, but issues such as depositing the margin money should be done in a jiffy to make sure that the position held by the client remains intact rather than getting squared off due to the insufficient amount.

Online trading does offer the option of directly linking Demat and the bank account.

Clients can transfer the money instantly to their bank account for taking up any trade or even the margin amount.

Equities are known as liquid assets as they can be converted into cash instantly. Online transfer and withdrawal facility perfectly complement this aspect of the equities.

Single Platform

Broker houses make sure that their PC and mobile app offers every option under the single head to the clients.

Apart from buying and selling the stock, traders can transfer and withdraw money, review their portfolio, and get online assistance through the expert chat window. Other than offering the reports, these online platforms also give the option of technical analysis.

Experienced traders often like to put different types of technical indicators to make an informed decision. Indicators such as moving averages, RSI, MACD, Bollinger bands, etc. help the traders to find a winning trade. However, in offline trading no facility is available.

Real-time Information

In offline trading, it becomes difficult to keep track of the minute-to-minute price of the stock or how the portfolio is performing throughout the day.

All the information about the trade is given to the client either through a contract note or confirmation call, which is done after the market hours.

Limited information about the trade cripples the options of the trader to make a decision.

For instance, if a client feels that the stock price has been range-bound throughout the day and the trade is not fetching good returns, they would switch the stock.

However, due to the lack of real-time information about the market, a trader is unable to do so in offline trading.

There is little doubt about the fact that online trading has made it easier for the traders to buy and sell the stocks, get the real-time information about the stocks and pay comparatively less fee to the brokers for every trade taken. However, choosing between online and offline trading also depends on various other factors.

Experienced vs New Trader

Experienced traders, who have been managing their trades and investments on their own, would like more control over their investments and trade.

This is another way where the Online Vs Offline trading differences come into the play.

On the other hand, traders who just started would always like the assistance of the experts. Even though online platforms offer a simple interface to the clients, putting orders is not that easy for an inexperienced trader.

At times, clients can make massive mistakes in selecting the wrong quantity or wrong position.

Therefore, for the first few months, the assistance of an expert is essential to them. Almost all the brokerage houses offer assistance and provide training and know-how of their trading platforms.

Once the client is through, it is up to them to go into an offline or online mode.

Lack of proper Infrastructure

While most of the clients today are equipped with the multimedia devices and PC at home, there are retail clients who start trading at a very low scale just to get a hint of what trading is and thus don’t get actively involved. Also, connectivity could be an issue for some who live in remote areas.  

Such clients would need offline assistance at every cost.

Portfolio Management Services

There are clients, who cannot be actively involved in day-to-day trading as their nature of work does not allow them to. However, they would like their portfolio to be managed actively and generate favourable returns.

For such clients, broker houses offer portfolio management services guaranteeing them to save on their capital and at the same time, generate decent returns.

Therefore, selecting between online and offline trading largely depends on the requirements and set up that the client has.

While active and experienced clients would be more focused on saving on the fee and greater control of the investment, those with less-time would resort to offline assistance.

In case, you are looking to perform trading but do not know which stockbroker suits the best for you, just fill in your details below.

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