Benefits of Online Trading

10 April, 2024

Online trading means you can use the online platforms provided by stock brokers to place orders and manage your portfolio electronically. It eliminates the need to engage with a broker or a trading house in person to execute a trade. This is contrary to the traditional method of trading, where you have to rely upon a broker to facilitate the sale and purchase of your financial instruments.

Online trading empowers you to execute trade orders through a platform, offering enhanced flexibility and transparency. It gives you more control over trading decisions and grants authority to respond to market conditions.

Advantages of online trading

• Convenience and cost efficiency - Online trading grants you convenient access to trading opportunities. It just requires an internet-enabled device to execute orders. It eliminates the need to visit a broker or a trading house.
  The online trading environment is highly competitive, forcing brokers to charge lower fees. This benefits traders by cutting costs and making the process more efficient.

• Portfolio management - In addition to easing the process of trading, these platforms also enable you to monitor and manage your portfolio on-the-go. They let you track your holdings and their performance, and provide reports to help you understand your allocations. Hence, it enables better decision-making.
  Many platforms also offer research tools and other knowledge resources to help you gain more information and build trading skills.
  They give you access to your portfolio 24x7, allowing you to monitor the results at your convenience. This lets you explore potential opportunities and make strategies around the clock.

• Transparency and real-time information - Online platforms provide you with real-time information and charts to help you make swift trading decisions. They also increase the potential to benefit from short-lived opportunities. 
  They offer various analysis tools and news resources to help you gain insights from happenings across the economy and make more informed strategies.

• Accessibility - These platforms provide access to a variety of financial instruments, such as stocks, bonds, derivatives, commodities and currencies. This helps you reduce risk and leverage more opportunities. They also enable you to transact without any intervention from brokers, ensuring more autonomy and control over trading decisions. 

• Automation and algorithm trading - One of the key factors distinguishing the online trading experience from traditional trading is the ability of automated trading. Certain platforms offer the capability to employ algorithms that can automatically initiate transactions once the specified conditions are fulfilled. This capability reduces the need to monitor the markets continuously and enables you to take advantage of opportunities.
  
  

Objectives of online trading

• Portfolio growth and diversification

Investors target the financial markets to increase their portfolio wealth over time, taking advantage of market fluctuations and benefiting from price movements of various instruments. Online platforms facilitate this goal by serving real-time information and helping you take advantage of short-term opportunities and sudden price drops and rises.
Online platforms also help you meet your goals by offering a wide range of financial instruments. It helps cater to your risk appetite and generate the best possible outcome within suitable opportunities.

• Hedging

By offering a variety of trading opportunities, online platforms enable you to minimise risks by entering into multiple trading positions. This helps offset potential losses from one particular investment and provides a more stable and profitable trading experience. It enables you to insure yourself against losses and stabilise the cash flows in your portfolio.

• Speculation

Online platforms are helpful for traders who follow a speculative approach, particularly investors targeting to benefit from the anticipated price fluctuations in short-term trading opportunities. You can transact in various financial instruments which meet your expected price and time targets to take advantage of potential price movements in the future.

• Higher liquidity

Thanks to the speedy transactions on online platforms, you have the flexibility to enter or exit from positions as and when you please. This provides the capability to capitalise on more opportunities and ensures higher liquidity for you. Having individual and institutional traders engage in real time encourages higher trading volumes and ensures more liquidity. 

• Increased exposure

Online trading enables you to meet your geographic diversification objectives. They provide opportunities to access global markets and reap benefits beyond your physical reach. You can engage in global markets through direct or indirect participation. This can be done by transacting in various instruments, such as stocks, currencies or Mutual Funds that cover international financial instruments. This helps expand your investment horizons and potential returns.

• Personal objectives

Online trading serves both financial goals and personal objectives. Users seeking to gain experience and learn about financial markets can leverage these platforms to study the movements and trends in real-time and increase their understanding of the markets.

It also helps investors seeking long-term investment objectives to plan for their future and accumulate wealth at their own pace and comfort.

For some users, it can be a source of feeling empowered by making their own decisions and driving their capital gains. 

Online stock market trading is more efficient and convenient as compared to traditional ways of trading in the market. It gives you autonomy without having anyone weigh in on your trading decisions. 

Now that you understand the online share trading meaning, you might be wondering about opening a Demat Account. The HDFC Bank Demat Account has got you covered. It provides you with a wide range of securities, ease of tracking investments, seamless movement of funds, and much more.

Click here to open your Demat Account online!

*Terms and conditions apply. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks, read all the related documents carefully before investing.