What is online trading in securities?

1. What is online trading in securities?

Online trading in securities is an online platform that gives you access to stock exchange. For this you need to register with an online trading portal and it facilitates you to trade in various financial instruments such as equities, mutual fund and commodities.

BSE provides online trading system known as BOLT and NSE’s online trading system is known as NEAT (National Exchange for Automated Trading).

2. What are safety measures an online investor must know?

Before investing online in share market, investors must take some safety measures such as:a) Investor should never share his password with anyone and must change it at periodic intervalsb) Operating an online trading account from cyber cafes should be avoidedc) The default password provided by broker should be changedd) Check for confirmation after placing an ordere) Investor should always ensure that sufficient securities are available in his accountf) Regular payment of margins should be made to avoid blocking of account

3. How to open an online trading account?In order to trade online in stock market, one needs to open an online trading account with the registered broker. You could also check the reviews of brokers and choose accordingly.  To open an online trading account in India you need a proof of identity and residence.

4. How online trading is different from offline trading?

Offline trading has lost popularity in Indiaa) Online trading consumes less time as compared to offline tradingb) You can find the records easily in online trading, while in offline trading it becomes difficult sometimes to find the recordsc) An online trading can be risky if you don’t have any knowledge of stock market as you may end up buying wrong stocks and make a loss, while in offline trading broker helps you to buy the right stock.d)  The chances of fraud are less in online trading by broker as you can handle your own account whereas in offline trading chances of fraud by brokers are more.

5. What are the documents required to open an online trading account?You need your identity proof and proof of residence to open an online trading account. You also need to execute a member-client agreement for online trading by filling KYC form which includes rights and obligation of online trading member.

6. How fund transfer takes place? Do I need to have internet banking and demat account as well?Funds can be transferred online through payment gateway, and update a buying limit in your trading account. You can trade even if you do not have an internet banking facility by submitting a cheque and buying limit will be provided to you. It is important to have a demat account for trading online.

7. Apart from equities, which other asset classes can I trade online? Can I apply for IPO via online trading?One can invest in equity shares, mutual funds and IPOs through online route.