BAJAJ BROKING
If you belong to the younger millennial generation or even Gen Z, you may have only known online trading as the default method of participating in the markets. However, a few decades earlier, before trading and investments were digitised, traders congregated in physical spaces to place buy and sell orders via the public outcry system — which is exactly what it sounds like. Orders were placed orally, with a process that resembled the auction house technique.
However, the shift from physical to electronic trading was accelerated by the establishment of exchanges like the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Today, trading in the Indian financial markets occurs entirely online. Needless to say, this has made trading easier and more accessible to people across the country.
In this article, we’ll take a closer look at how online trading works and the benefits of online trading for market participants.
Online trading is the process of buying and selling shares, bonds, mutual fund units and other securities and financial assets online, through electronic channels that require no physical interaction between buyers and sellers. This type of trading occurs entirely online.
Let’s take a closer look at how online trading works before delving into the many advantages of online trading.
This is how simple online trading is. Your stocks and securities will be automatically held electronically in your demat account and debited from there when you sell them.
Now that you have a clear idea of how online trading works, let us discuss the benefits of online trading for market participants today.
Physical trading of shares and securities was a tedious and cumbersome process. If you wanted to sell several shares in different companies, for instance, you would have to carry around a bunch of documents to facilitate the trade.
Now, however, with the advantage of online trading, you can conveniently place an order online for several thousands of securities online with just a few clicks. This makes trading extremely convenient for modern traders because it’s possible to trade from anywhere at any time. All you need is a good internet connection and a handy device that is connected to the internet.
Earlier, before online trading became the norm, it was impossible for traders to monitor the prices of stocks and securities remotely. You would have to visit the exchange in person to know the prevailing rates.
But with the popularity of online trading, this has changed significantly. Today, one of the most prominent advantages of online trading is that you can remotely monitor the prices of stocks and securities in real-time by simply logging into your trading account on the mobile app or website application provided by your stock broker. This makes it incredibly easy to plan your trades.
Another one of the top benefits of online trading is that you can place your order and have it executed almost instantaneously. If there is sufficient liquidity in the market, meaning that if there are enough buyers or sellers for your order at the price range specified (if any), your trade will be executed right away.
This is in stark contrast to the physical trading of shares and securities, where it often took hours to complete a trade successfully. With near-instantaneous order fulfilment facilitated by online trading, you can take advantage of favourable prices in the market easily, without having to wait for hours at a stretch to execute your orders.
Another underrated advantage of online trading is that it is extremely cost-effective for the trader. The middleman in stock and securities trading is almost entirely eliminated, and this, in turn, removes a number of unwanted costs and expenses. Furthermore, many leading discount stock brokers have emerged in the markets today, and they empower traders to place orders in the market at a nominal flat fee (or even at no fee for certain market segments).
In addition to this increased cost-effectiveness brought in by online trading, you also get more control over the order that you place in the market. Using your preferred stock broker’s trading platform, you can place buy or sell orders for any number of securities at any preferred price point. You can even choose between limit and market orders, and make use of the stop-loss function to reduce the losses you may face in the markets.
With this, we come to the end of the discussion on the benefits of online trading for participants in all segments of the financial market. To successfully place a trade online, you need to have a demat account with a depository participant and a trading account with a stock broker.
Bajaj Broking makes this easy by allowing you to open a demat and trading account on the same platform in a few simple steps. With a completely digital process and a user-friendly interface, Bajaj Broking’s trading solutions enable you to tap into the many advantages of online trading with just a few clicks.
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