Online Trading - Introduction

sponsored links

Online Trading or Direct Access Trading (DAT) of financial instruments has become very popular in the last few years or so. Investors could log on from anywhere, at any time and appreciate market events and carry out investment decisions over the internet. With online portals and service providers, offering the investor easier and cheaper ways of holding trading accounts, the online investment scenario has boomed. Now almost all financial instruments are available to trade online including stocks, bonds, futures, options, ETFs, forex currencies and mutual funds.

Online trading differs in many things from traditional trading practices and different strategies are needed for profiting from the market. In traditional trading, traders are executed through a broker via phone or via any other communicating method. The broker assists the trader in the whole trading process; and collects an uses information for making better trading decisions. In return of this service they charge commissions on traders, which is often very high. The whole process is usually very slow, taking hours to execute a single trade.

In online trading, trades are executed through an online trading platform (trading software) provided by the online broker. The broker, through their platform offers the investors access to market data, news, charts and alerts. Often investor can trade in more than one product, one market and / or one ECN with his single account and software. All trades are executed in (near) real-time. In return of their services online brokers charge trading commissions on software usage fees.

Online Trading in India :

Online trading in India is the internet based investment activity that involves no direct involvement of the broker. There are many leading online trading portals in India along with the online trading platforms of the biggest stock housses like the National Stock Exchange and the Bombay Stock Exchange.

That's all for now friends. In our next post we shall discuss about the advantages and disadvantages of Online Trading. Happy Reading :)

Check the Advantages and Disadvantages of Online Trading from here

sponsored links