Question- What are the benefits and demerits of online trading?

Ans.

Benefits of Online Trading

These are as under-

1. The expenses of trading have gone down as well with trading online process. The maintenance costs and other charges are reduced by the brokerage houses on trading.

2. Online trading makes trading experience errorless to a great extent. As there is no paper trail, miscommunications can be avoided.

3. Investors have access to the research reports of various companies on your trading platform only. They do not have to go places to look for the reports. One can easily find them all on the trading platform for analysis.

4. By doing online trading, investors can see and judge where market (or your stock) is heading by seeing different graphs online yourself, which is not possible if your're trading through a broker.

5. It takes little time to execute orders. Investors can place orders with shortcut keys saving their time. With the online platform, there is no need to visit the brokerage house or stock exchange, which saves their time as well and effort.

6. Transactions and related documents can be seen online and can also be downloaded to your PC without depending on your broker. Investors can also check the status of your amount on daily basis through online trading system.

7. Investors have full control over their investments when trading online. Investors place their trades, monitor them as and when they want, check their portfolio and do the changes if required.

8. It's not possible for a broker to update each news about the market or any news which will influence or affect the stock market.

9. No need to depend on any broker or anybody else to place the order or to square off the order.

10. Online trading is quite simple. It works fast and effectively. This enables many stock market enthusiasts to trade on their own without any hassle.

11. Investors share certificate get deposited in electronic forms (Demat) in your trading account.

12. There are also technical analysis tools on trading platforms which is a boon for the daily traders. It has become possible with the online trading facility and trading platforms.

13. Investor can place orders before start of a trading session. Order can be placed offline during non-market hours.

14. The investor can invest or trade in all types of options. Can invest in new IPOs, bonds, mutual funds etc.

15. Investors can buy/sell shares at any platform. Get real time market information about companies and stocks. Trades can send order from web, desktop, mobile app. Expert re-commendation and investment advice easy available.

16. Investors can immediately deposit the amount from the bank account linked to the account for shares. Or they can deposit the after-sales profit in your bank account immediately. When to check the details of transactions on the account. Experience secure transactions on all fronts can be gained through this.

17. Online trading frees investors from the hassle of going to the broker's office or calling him to buy/sell. Most of the time the phone in the broker's office is busy and it takes a long time to match your call..It may also be a mistake to listen to the shares investors mentioned and their number. All this can be avoided by this.

18. Investors can register in advance as well as set stop loss (this facility is only available on certain terminals) and set time alerts. They can keep a list of shares.

19. It is a wonderful experience to trade in the world's top stock market.

20. Investor can immediately see the fluctuations in the market price or index, the chart of any stock and its historical price level.

Disadvantages of Online Trading

These are as under-

1. Since the trading terminal runs on a computer system, those who do not have knowledge of computer internet have to spend a lot of time learning it.

2. Greed, Fear and Patients are the main factors for stock market success. It is very difficult to control emotions at the time of heavy market fluctuations.

3. It may face problems such as electricity cut-off, PC problem, etc. during online trading.

4. Elimination of a broker is mean trouble.

5. Without proper investment advice can cause big loss.

6. In bull market every decision earns good profit but once market change the gears then is its very hard to survive in stock market.

7. In online trading system, an investor may face the problem of disconnection to internet due to which he will not be able to login to his online trading system and hence he can't do trading. At such critical times he has to call the trading system executive and do trading.

8. Sometimes the website may run slow, the internet may not be up to speed, the computer may not respond, the server may go down, and the trading terminus may not be convenient to use.

9. The mechanism or systems fails due to the less speed of internet connections, its cause huge loss in trading.

10. Although the brokerage fee is lower, other facilities have to pay more. It seems like a lot of rounding up. Brokerage charges for online trading is very low but if investor needs, call to broker for order placement they charges 2 or 3 times higher fees.

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