Benefits Of Online Trading

Last Updated September 14th 2021
7 Min Read

Trading in the stock market was once considered to be a privileged occupation that was restricted to a select few with the required regulatory licence, high levels of knowledge and skill, and huge capital. 

But that was in a different age when trading was physically done in the stock market that could be only accessed and operated by brokers and traders of banks and large financial institutions. All that changed with the advent of computers and the internet and the world of online trading. 

So what is it about this evolved way of buying and selling shares and how could you be a part of this world? And, importantly, what exactly are the benefits of online trading as we know it today?

Steps To Get Started With Online Trading

First, any new trader who enters the world of online trading should get started with some procedures and preparations. These are the steps to begin full-fledged trading in stocks and will be a relevant read to size up the road ahead. 

From selecting an online stockbroker to an overview of what you need to know as an aspiring beginner looking to have a smooth entry into online trading, this will help understand the steps to be taken.  

Choosing the right online stockbroker

This is a key point from where the real action begins and it is important to get started with the right partner. You will be spoilt for choice when it comes to online trading options and that can also be a challenge in finding a suitable one. 

The process begins with opening a trading account that entails registering online to set it up. There are the mandatory documents that need to be uploaded – personal information to validate the account holder, proof of residence and any other regulatory requirement to be complied with. Finally, once the account gets approved and goes live, you are required to transfer the stipulated amount to the trading account to get started.  

Finding the right stocks to trade in

Once you have got the account opening documentation and the account set up, it is time to start the actual trading action. To begin with, you will have to decide on which stocks to trade in. 

This is easier said than done as the very process of selecting a stock to buy or sell is the product of some serious research and analysis. There are no short-cuts for this, however, and as an aspiring trader, you will need to read up and refer to the best news and updates and analysis and charts to identify your potential trades. 

Finding good material need not be too difficult. Once you decide on which industries and sectors to focus on, it is a matter of time and effort before you access the company’s annual report and balance sheet. Besides, most of the relevant information is in the public domain. Quarterly earnings reports and regulatory filings are widely available while there are analytical tools that help assess a stock’s historical performance. This combined with price movement patterns and trends can help project future opportunities and risk possibilities. 

When and how many stocks to buy or sell?

As a new or intermediate trader, it is equally important to pace yourself and your progress. Often, a premature attempt at growing fast results in trading too ambitiously and mistakes getting committed. 

The best way to start trading is to begin modestly and cautiously. The initial months can be a gold mine for learning and these should involve observing and picking up lessons from both successes and failures. 

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Managing your stock portfolio

Once you have taken the first steps in trading and have started to feel comfortable with the process and settled down, you will have a portfolio of your own that will start growing. It can be quite a responsibility to be managing your stock portfolio as this will need constant monitoring and taking corrective action. 

At this stage, it is all about being watchful – both for opportunities as well as ensuring risks are avoided. Markets can be changing, even at the best of times, but volatility can be a reality and test you often. As a trader who is aiming for creating successful trades and registering profits, you also have a bigger duty to your capital in terms of protecting it from losses. 

A good trader is always on the lookout for strong trading opportunities that convert to gains. But a successful trader is one who understands risk management and adopts best practices like portfolio diversification, using proven methods like stop loss and being unemotional while trading. It is important not to be attached to a trade but to see it objectively and consider the overall gains rather than the individual losses. 

Why You Should Do Online Trading?

Trading in stocks has always been a much sought after profession for more reasons than one. There is the lure of profits and a reputation for being a sharp and financially savvy professional. 

But till the doors opened up for the vast majority with the advent of online trading, it was restricted to only a few insiders. Now it is a field where anyone with an interest in stocks and an aptitude for trading can enter and make his mark. 

The benefits that online trading bring are clearly there for everyone to see. But here, anyway, is a brief look at the obvious ones that make it such an attractive and possible career for you. 

It is accessible to all 

Online trading is a revolution because it is so accessible to everyone and from anywhere. There was a time when trading and the stock market belonged only to a select few and the traditional brokers were the middlemen through whom the individual small investor could transact. 

But the digital era has made trading a level playing field where even the smallest of traders and the ones with no experience could step into the arena. All they needed was a trading account, internet connectivity and some funds to get started. Of course, other prerequisites include an active interest in the stock market and trading, besides some knowledge and acumen for the profession. 

It is the fact that trading today can be done by anyone and everyone, thanks to the online nature of the stock market operations that has totally transformed the game. 

It is convenient

Another reason why online trading is such a compelling reason to take up is the fact that it is so convenient to use and transact. It does not matter as to where a trader is based out of or physically present. All he needs is a computer or even a mobile phone and internet and he can as well be on the trading floor. 

Online trading has completely transformed the way trading and investments happen. With a trading account and the basic infrastructure, anyone can be a trader. The convenience that accompanies this modern-day trading facility has broadened the trading circle and increased the numbers of traders, regardless of their experience or the size of their operations. 

It is cheaper

As has happened with e-commerce sites that offer a better bang for the buck over brick and mortar stores, online trading too holds out an advantage over conventional brokers. 

Given the very nature of the platform, online trading costs much less than a manual broking shop. This allows a portal to pass on the cost-benefit to the trader and make lower or zero brokerage possible. As commission can eat into the trading expenses, the online trading model is cheaper for traders and helps lower their operating costs and increase net gains. 

Read Also: How Much Money Do I Need To Trade Stocks?

Easy to manage

Imagine having all information about your portfolio just a click away. Gone are the days when you would have to call up your broker to know the status of your investments.

One of the big advantages that online trading offers traders is the ease of monitoring and managing your portfolio. Back in the day, you would have been totally dependent on your broker to give you an update of your holdings and the changes that took place over the day’s trading. 

Total control over your trading

In an offline trading age, all trades – buying and selling – would have to be conveyed to a broker over the phone or other non-digital means. Till the broker got back to you confirming the execution of the order, there was no way to understand that it went through. But, today, an online trader can manage it all on his own and the status and the transactions can be checked online. 

The ability to manage your trading on your own with the online portal and its services means that, as a trader, you now have total control over your operations. There is no waiting to speak to a broker or being dependent on his analysis and execution. 

Benefits such as these empower you to make the most of the resources available today and become a better, more successful online trader.

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