Sharekhan Blog

Learn Online Trading For Beginners

  • Mar 9, 2024

While stock markets present lucrative return prospects, their historically perceived complexity deterred retail entry earlier when operational access remained confined through privileged full-service brokers charging excessive fees.


In this article, we will learn about online trading by individual investors conveniently using technology from anywhere, anytime.

Understanding Online Trading

Online trading allows the buying and selling of supported financial instruments directly using a broker's internet-based trading platform on your analysis rather than depending on advisor recommendations. This online stock trading for beginners facilitates the placement of investment orders electronically at low brokerage costs into assets like:

? Stocks ? Mutual Funds ? Commodities ? Currencies ? Bonds ? ETFs

Key Advantages of Online Trading

  1. Convenience: Enables trading from anywhere at any time during market hours using simple apps requiring only basic digital literacy without geographical limitations.
  2. Real-time Tracking: Portfolio positions across assets get consolidated for easy tracking, enabling better ongoing decisions. Integrated analytics also assist research initiatives.
  3. Control: Placing orders independently based on customised analysis, research data or predictive tools without the necessity for human broker approval unlocks greater flexibility.
  4. Cost-Effectiveness: Significantly lower commissions and zero account balance requirements offered by online brokerages expand feasibility for first-time retail traders.

Evaluating Online Brokerage Account Providers

SEBI regulations mandate brokers offering online trading services to retail investors hold valid operating licenses, ensuring fiduciary responsibilities, transparency and risk management oversight. Leading consumer platform choices include: 

  • Zerodha: Pioneer in India driving new-age discount concept with award-winning robust platforms, minimalistic pricing, educational ecosystem and overall feature richness tailored around self-directed investors.
  • Upstox: Known for its intuitive user interface, quick account opening capability backed by reputed Ratan Tata funding and multidimensional platform seamlessness spanning options beyond equities too into mutual funds, currencies, etc.
  • Finvasia: Offers full spectrum consumer coverage from discount to assisted advisory services models under a consolidated umbrella while harnessing deep technological innovation and delivering efficient trading experiences across segments.
  • AngelOne: Notable for extensive research and analysis content services, strong technical platforms facilitation and flat fee structures attracting informed active traders community engagements.

Getting Started with Online Trading

The first step for an aspiring new trader involves shortlisting a suitable online brokerage partner. In India, all financial market trading platforms must hold valid operating licenses from regulator SEBI ensuring adherence to fiduciary duties, transparency and risk protocols protecting consumer interests by law. The ease of initiating online trading today involves three simple steps conveniently executed digitally:

1. Broad Platform Choices Available

After that, a choice emerges between opting for discount platforms focused purely on efficient self-directed execution services charging minimal fees or full-service entities bundling execution with intensive advisory spanning trade recommendations, research analytics and overall portfolio guidance charging relatively higher subscription fees.

2. Discount Brokerages

Pure digital discount brokers emphasise providing seamless investment order placement at the lowest commissions but expect clients to perform their own research, planning and trade decisions instead of dependency on relationship managers. This route proves cost-effective for confident, hands-on investors who are willing to learn market nuances themselves using available online educational materials to inform periodic position-taking without the need for advisories.

3. Full-Service Models

Full-service brokerages target investors high on convenience instead of just cost savings to make their money work harder. Hence, they bundle dedicated trade advisory and portfolio management support through personal relationship managers alongside execution access. Ideal for seasoned investors having large, complex portfolios warranting tailored strategising for regular rebalancing needs optimised toward financial goals.

4. Arriving at Optimal Account Matches

In the end, choices narrow down to individual investor preferences, capital availability, experience levels and either the availability of adequate time for self-management or the need for expert oversight directing money given dynamic markets. By objectively assessing fee affordability, guidance requirements and sophistication levels, both new and seasoned traders can determine whether either a discount or full-service brokerage accounts suit current maturity best.

5. Open Demat Account

Like a bank account securing cash, Demat electronically stores share certificates securely instead of handling those extra risks. Trading accounts facilitate actual buy/sell orders placement linkable to Demat for streamlined stock settlements.

6. Initial Funding

Link bank account ahead, enabling seamless transfer of investment capital into trading account anytime for buying stocks after research. UPI, net-banking channels offer quick, paperless routes to take positions on prospective ideas.

7. Placing First Trade

Using trading platform tools, analytics and research capabilities, traders can actively evaluate opportunities across market segments, matching outlook or predictive indicators before entering the first investment order through a few clicks and proceeds tracking.

Conclusion

Online trading platforms have successfully transformed individual wealth creation journeys by offering simplified, low-cost access to lucrative yet complex equity markets for common investors. By rationally educating themselves on prudent practices and diligent self-regulation, retail participants can now pursue aspirational money targets conveniently from anywhere, anytime in this digital era of democratising finance.

Team Sharekhan
by Team Sharekhan

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