Today, stock markets allow investors to buy or sell financial assets from the comfort of their homes. All thanks to the demat account facilitating online stock trading. You can approach a brokerage firm and open a demat account.
Online vs Offline Trading – Journey from Banyan Tree to Mobile Screens
Before the inception of the internet and demat account, there was no other option than visiting a stock exchange for trading financial securities through a stockbroker. When you made a physical visit to the broker’s office, then the broker would trade on your behalf.
Stock markets have evolved a lot since the 1850s. First, stock trading was started under a Banyan tree on Dalal Street. Then the Bombay stock exchange (BSE) was established in 1875 and the command of stock trading was transferred to this ground-based exchange. It was an offline trading system called an open outcry trading system. Individuals had to yell to participate in buying or selling financial assets. Investors had to rely on stockbrokers to find buyers and sellers for their trades. Due to this, the settlement process was lengthy and could take months.
With the invention of the internet and demat account, stock trading has evolved as a screen-based trading system. Demat account opening online is easy with eKYC. Dematerialisation of securities has eliminated paper-based shares and decreased the trading settlement cycle to 2 days only from months.
Offline or Online Trading – Which is the Best for Profit?
With the manifold advantages of online trading, there is an increasing number of retail market participants. Here is how online trading is best for profits in the stock market:
- Perform Intense Stock Research: In this digitally advanced era, you can find several investing tools working with artificial intelligence. These tools can help you to perform thorough research to make investment and trading decisions. You can look at a particular stock’s past performance, company’s dividend payments, etc., and choose profitable ones.
- Charting Tools: Traders, especially those involved in intraday trading, have smarter technology to make smarter trading decisions. Trading tools can provide you with data insights. You can use these to make your buy and sell decisions for better and more informed trading decisions. Powerful Artificial Intelligence (AI) and analysis technology help traders in an efficient manner.
- Stop-loss: The foremost rule to stock trading is protecting your capital to stay long in the stock market. Stop loss trades help to protect your capital and act as a defence against market volatility. Overall, it saves you from huge losses. As per discretion, a trader has to decide on how much risk he/she can bear in a particular trade. Technically, there are two methods to decide on the stop-loss limit – the support & Resistance Method and the Average Moving Method. The easiest method to place a stop-loss order is to set it below a “swing low.” A swing low is the level where the price decreases first and then bounce back. The stock price finds support at this level. Ideally, there should be some fluctuation at the point and flexibility to get out of your position before getting terrible if the price starts to oppose you.
- Virtual Trading Apps: Virtual trading apps are good for investors as well as traders to understand the stock investing and trading process. It makes you learn basic investing and trading strategies, monitor your investment portfolio easily, and gain confidence to dive into the real trading world. Virtual apps allow you to learn to use fake money. It is like a practice net for investors as no real money is involved here. You will know how to buy and sell stocks and track your trades to know losses or profits in this learning process. There is no risk of loss as you practice trading with virtual money. Most stock brokerage firms offer mobile trading apps with virtual trading features to their clients.
- Profits with Increased Safety: Online trading is much safer than offline trading as online trading platforms are always encrypted to prevent unauthorized access. Each transaction gets completed under the surveillance of the SEBI. Brokers ensure safety for traders as a lot of protection is inbuilt into the online trading system. There will be no loss due to fake or damaged paper-based security.
Thus, the advent of the internet has made everything online, and the use of advanced trading platforms has made it easy to profit from buying and selling stocks. Open your trading account with a stockbroker and trade financial assets on stock exchanges.