Online trading is the purchase and selling of financial assets like shares, commodities, and bonds online. It has now made it possible for investors to do away with a physical broker.
Presently, using any computer, investors can access the financial markets from any corner of the world. With a trading account and a Demat account, anyone is available to trade.
Let us understand how to trade in shares and the role of a trading account first.
What is Online Trading?
Online trading refers to trade in financial securities through the internet. Investors can purchase and sell shares, bonds, commodities, and even currencies online by accessing real-time stock exchange through an online broker.
A trading account is established through which one can monitor and analyze market trends and execute transactions at a go without going through an intermediary.
What is Trading Account?
A trading account is actually your entrance to the stock markets. It will allow you to place buy and sell orders for the shares and other securities.
In simple words, it acts as a bridge between your bank account and the stock exchange. The financial transaction actually happens within the trading account-be it in shares, commodities, or any other asset.
The Demat account is linked to the trading account. In your Demat account, your purchased securities are kept in an electronic form.
On selling shares, your Demat account is debited and the selling proceeds are credited in your trading account.Now that we know what is trading account, let’s understand how to trade in shares.
How to Trade in Shares?
Here’s How You Can Trade in Shares
1. Trading and Demat Account Open
Open both a trading and a Demat account with a registered broker. In the case of transactions, it happens in the trading account, whereas your purchased securities will be held in the Demat account.
2. Fund Deposits
Once accounts are opened, it will be possible to deposit funds into the trading account through net banking, UPI, or NEFT. They may be used for buying shares.
3. Analyze the Market
Online trading platforms give you all the resources and data you need to analyze stocks, track the movement of prices in the market, and make decisions based on information.
4. Place Your Order
You can now request to buy shares. Select the stock of the company you are interested in, the number of shares you need, and proceed to enter the trade. There should be a condition on whether it is a market order-executed immediately at the prevailing price-or limit order-executed only when a certain price for the stock is attained.
5. Monitor, and sell
Once you buy shares, track how the shares will perform. Sell them when you feel the appropriate price has been reached so that you can get the best possible return out of it.
Benefits of Online Trading
1. Flexibility:
With online trading, you can trade anywhere and at any time. From home or on the go, trading platforms help to ensure easy tracking of markets and placement of trades.
It has lower commission and fees costs compared to the traditional brokerage services, thus preferred by the retail investor.
2. Direct Control:
The investor is in control of all transactions since you can call when to buy or sell with real-time information from the market at your beckon call.
3. Access to Research Tools:
Most of the online trading sites provide full research tools and reports, which allow you to make informed decisions based on market trends.
Risks Involved in Online Trading
While online trading may be lucrative, please note that there is always a risk involved with an investment. Market volatility most of the times brings sudden price fluctuations that a person might not have prepared for and eventually finds himself in a loss. One needs to get all the market news and regularly check his portfolio.
Another aspect that leverages can achieve is an amplification of both your gains and losses by using other people’s money to trade. Therefore, beginner traders should first understand the markets before proceeding into high-level trading techniques.
Conclusion
Online trading has made financial markets accessible to a large audience; thus, making it convenient for an individual to deal with shares and other assets. You can also find real-time data and place buy/sell orders with a trading account.
For the new traders, it is imperative to take the time to understand how online trading works, be updated, and then choose the correct platform for yourself so that there are no hassles in trading.
