Trading in Stocks and Equities has always been a major source of monetary interest for the average investor. Not only did it provide high dividends on the investments made, but it also ensured long term capital gains. The volatility of the stock market has been a cause of worry to people who had invested high amounts in stocks and bonds. At any given point of time tides would turn, which would determine the fate of the investment made. The advent of the internet has proved to be a boon for investors as they can stay attuned to the market 24/7 from any part of the world and can control the nature of investments. Over all
Online Trading & Investing has made transactions safe, simple & secure.
Let’s begin with the basics. A Share of Stock is a tiny piece of a corporation. Shareholders/ Stock Holders (people who buy stock) keep investing in the company as long as they own the shares. The price of a share varies according to economic conditions, the performance of the company, the Stock Market volatility and investors' attitude. When the Share Market run makes a profit, the profit is shared with the investors & is termed as a dividend. Stocks that issue frequent dividends are income stocks. Stocks in companies that re-invest their profits are growth stocks. With the advent of the internet, Online Investing or self directed investing has become the norm of Individual investors & traders over the past decade. Currently all Stock Brokers offer Online Trading Services with unique trading interfaces as it makes transactions quick & also being convenient gets in more clients. Investors trade & communicate online with brokers & fellow investors via ECN’s (Electronic Communication Networks). Some orders entered online are still routed through the broker allowing agents to approve or monitor the trades. This step assists in the protection of both the client and brokerage firm from unlawful or incorrect trades which could affect the client’s portfolio or the broker’s license.
The first thing you do when you trade online is to ask your broker to create an Online Demat Account for you. As per SEBI (Securities & Exchange Board in India) it is mandatory to have one if you are trading in 500+ shares. An Online Share Trading exchange is like a warehouse A person or computer must match each buy order to a sell order, and vice versa. Some exchanges work like auctions on an actual trading floor, and others match buyers to sellers electronically. When you buy and sell stocks online, you're using an online Share Broker that largely takes the place of a human broker. You still use real money, but instead of talking to someone about investments, you decide which stocks to buy and sell, and you request your trades yourself. Some Brokers in India offer advice from live brokers and broker-assisted trades as part of their service.
Prior to trading in Shares online you have to select an online broker. Your online broker will execute your trades and store your money and stock in an account. The online trading industry has seen lots of mergers and acquisitions, but there are still many firms to choose from. Different firms also offer different levels of help, account types and other services. Here are some things you should keep in mind as you look for a broker.
Other important parameters include the amount of money you intend to invest, frequency & level of trade & other sector related queries are to be considered before you select an Online Broker. It is advised not to invest a large amount initially. Invest slowly and then progress gradually. Off late brokerage firms in India offers various interactive trading interfaces that connects you with your investments through out and from any part of the world.
Buying & Investing in Shares has become all the easier. Proper guidance right from the beginning ensures that the investment is safe and profitable in the longer run.
