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Online Share Trading
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Online Share Trading, in general, can be seen as a complicated and risky topic since your hard-earned capital is going to be involved in trades. But is it?
Is it really that complicated or people with lack of knowledge can assume it to be? Is it risky or we don’t do enough research and analysis before making investments?
Let’s try to get answers to all these pertinent questions in this detailed review on this very concept.
The facility of buying and selling the shares through a virtual trading platform is referred to as online share trading. The facility is offered by most of the stockbrokers, as well as, the companies that offer financial instruments.
Not just shares, but other financial Instruments such as Equity, Mutual Funds, IPO, Commodity, Currency etc., can be bought and sold over the online trading platform.
Major instruments traded online are Equities, commodities, and currencies.
By equities, we mean the shares of the companies listed on the stock market.
Also, before investing in the stock market you can know about the sectors in Stock market, analyze the sector’s performance and invest accordingly.
Two popular commodities among the traders are Gold and Silver followed by other commodities such as Crude, Nickel, copper, aluminium, rubber and so on. Among the currencies, there are pairs such as INR-USD, INR-EUR and so on.
When it comes to online share trading in India, there are some specific areas that need to be taken care of, as discussed below:
Download and Register – Once the Demat account is opened, you will get an online share trading kit, which will include your ID, password and other instructions.
For accessing your account, go to the brokerās website (major brokers also allow you to do online share trading from your smartphone through their mobile trading apps).
The site would prompt you to enter a username and password followed by a couple of security questions. Once all the formalities are done, you would be able to log in the trading portal.
Basic Layout ā The basic layout of the trading portal is similar across all brokers. Some of the most used columns are:
- Scrip Code ā Name of the Share
- Bid ā Price at which buyers are willing to trade
- Ask– Price at which sellers are offering the equity
- Volume ā Total number of shares bought and sold
- Open ā Price at which the scrip opened at the first bell
- High price ā Highest price clocked by the scrip intraday
- Low Price ā Lowest Price clocked by the scrip intraday
- Close ā Price at which the share traded the last
Further, there would be several customization tools to allow users to set the portal according to their requirements. Such tools would help in selecting the columns that the trader finds relevant to take a decision for executing an order.
Learn the Shortcuts ā For quick online share trading, it is very important that you have all the shortcuts in your mind. Although a drop-down option would be available to select from, they are time taking.
Instead, shortcut keys can be used to quickly open the buy and sell windows on the portal, thereby saving a great deal of time.
Your broker would offer you assistance to learn about the trading portal. Make sure that you have asked about basic things such as putting buy and sell orders, putting a target, stop-loss and more.
Some Fundamental Knowledge – Before starting with online share trading, it is good to get some fundamental knowledge of the technical and fundamental analysis.
It will help you to make an informed decision. Further, it would also help you to understand the research reports and analyst recommendations.
Trading Tools – Brokers offer free charting tools to their clients.
These are basically technical indicators to help the trader enter the position at the right price and make a profit. Since a single indicator is not full proof; they must be used in combination to increase the chances of winning a trade.
Initially, reading the price and volume chart with all the technical indicators such as moving averages and RSI (Relative Strength Index) would not be easy. However, there are a number of online tutorials available on the internet that talk about every indicator in detail.
Different Tabs – If you as a trader want to trade in various instruments such as equity, commodity, currency and so on, the first thing would be to create different tabs for each instrument.
For instance, one-tab would include all the stocks and another one would have the commodities. Segregation makes it easier to place the orders without making a mistake.
Practice with Online Stock Simulator – Before starting online share trading with real money, it is always advisable to practice on the simulator.
It will not only get you the feel of trading but will allow you to set your hands on the trading portal. Also, on the simulator, you can trade without the fear of incurring losses.
Learning Curve – Users must not begin with heavy online share trading from the start.
Initially, a small amount must be invested to observe the market trends and develop own strategies. Further, these strategies must be timely updated with trial and testing method.
Online trading is witnessing more takers as the share markets across the globes are getting mature, especially in the emerging economies like ours. Online share trading has several benefits to offer.
Saves Time ā While buying or selling the stock even a second of time is extremely important as it can affect your returns. Calling the dealer and telling them to put the order might not be a very good idea compared to doing it yourself.
It is because when you call the dealer, they would ask a few verification questions along with the scrip name and price at which you want to buy or short the stock.
Though they are following the usual procedure, the time that goes in the process reduces your chances to execute the trade at the price you want. On the other hand, when you do online share trading yourself, you have the needed tools to execute the trade you want.
Keeps You Informed – Traders and investors want to be informed about the trades made on their behalf and the performance of their portfolio.
However, it can sometimes become tedious to keep calling the dealer or your relationship manager and get the status of every scrip in your portfolio.
But, with online share trading, you can know the status of your account anytime. Also, it helps you keep a check on any unwanted order or charges one may come across in your account.
Fewer Chances of Error ā There is no dearth of the blunders in the share market, especially when you are executing the orders via phone. Sometimes they would hear the wrong buying price or even the quantity.
At times, they also make mistakes like selling double the quantity of what was bought in the account.
A single error could cost you your portfolio. Even though the saying is āto err is human,ā but it is always safer to put the orders on your own.
Stock Watchlist ā It is another big benefit of online trading.
In offline trading, it is almost impossible to track specific stocks from the entire scrip list. With online share trading, you can keep a watch on the stocks that you want to track. You can always customize the list by adding or removing the scrips.
With stock watchlist, you can easily track price, volume, percentage change, etc.
Accessibility ā Almost all the major brokers offer mobile trading nowadays, meaning you can execute orders on smartphones. All you need is to download the trading app and get started.
These are simplified portals with an easy user interface, giving wider accessibility to a user to trade from anywhere.
Besides the benefit to trade from anywhere, mobile platforms also have the account information of the user. In the personal info section of the app, one can see the quantity and price of every scrip.
Mobile trading platforms also offer various features such as market news, intraday recommendations and fundamental tips.
Overall, online share trading makes it easier for the users to execute orders, know about the open and closed positions and total return for the day from anywhere without having to rely on the dealers and their RMs (relationship managers).
If you wish to perform online share trading through any mobile app, well there are multiple options for you out there.
This is one of the most important aspects while youĀ select a stockbrokerĀ for your stock market investments. Now, the next question is how do you figure out whether a mobile trading app is good for you or not?
Well, there are multiple parameters, such as:
- Performance or Speed of the app
- Types of orders allowed
- The number of features, especially for stock market analysis in the form of charts, technical indicators, drawing tools etc.
- Ā Overall user design and ease of use
- Availability of research or tips
- Depth of data and information at stock and index levels.
- Availability of trading signals
Some of the users may find some other features and have a different set of expectations but on a general note, the above-mentioned requirements are some of the most sought out for aspects.
To name a few, here are some of the mobile trading apps that we have seen doing better than the rest:
Having said that, it is strongly recommended that you perform a demo or guest login on any app before figuring out whether that online share trading app is good for your trading experience or not.
An app that may work for others, may not work for you!
In this last section, we would like to point out the importance of learning stock market trading skill. Yes, it is a skill that can be learnt over time through dependable sources only.
You may find a few youtube videos or blogs teaching you and those may work for a few.
However, it makes complete sense to go through a professional course of stock market trading as learning from an authentic and authority source will only bring relevance to your investment understanding.
We have been tirelessly working towards bringing one such source for you i.e. Stock Pathshala. This stock market education mobile app is going to bring a lot of value addition in your understanding of the stock market at all levels.
You get access to textual, audio and video courses when you use this app.Ā We strongly suggest you download/install this app and decide for yourself!
In case, you are looking to perform intraday trading but do not know which stockbroker suits the best for you, just fill in your details below.
We will arrange a callback for You, absolutely free!
More on Share Market Education:
If you wish to learn more about the share market in India, here are a few references for you:
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