Trading online in stocks and commodities is a fast growing trend in India. Since 2000, the internet bandwidth availability, technology and market penetration have significantly risen. Today internet is easily accessible over handheld devices thereby roping in everyone who has a smartphone, tablet or laptop even if they are not as well-versed with a computer otherwise.
People are also becoming more aware about investments. They want to invest and/or trade in stocks and commodities other than putting in their savings in insurance, MFs and PFs. Moreover the banking as well as the non-banking broking houses are continuously working towards making it easy for people to trade and invest in the stock markets. Other than the classic call and place orders, competitive brokerage rates and news/tips update services, they are offering well-structured, reliable, safe and real-time online trading platforms that can be run on every retail investor’s private device be it a phone, tablet, laptop or desktop.
Investors prefer trading online for simple reasons such as the ability to customize their interface, convenience, ease of tracking their holdings, freedom of trading at any frequency without waiting for the broker to receive calls and so on. Yet, some investors are not convinced of the safety of online transactions and hence they prefer the ‘dial to buy/sell’ system. But this percentage is decreasing fast as trading interfaces get smoother and better, loaded with features like analyzing tools, live news feed, broker tips, important announcements, etc.
Commodity trading online is still not as popular as the stock trading. This isn’t because of any shortcomings in the infrastructure or development but rather due to the widespread lack of knowledge and understanding about commodities.
Broking or trading companies largely advocate trading online mainly because they can enter the cut-throat competition in the market by offering low maintenance and brokerage to their clients. This is possible as the need for a broker to be physically involved is cut back with online stock trading. A person may be able to execute a few hundred trades between 10am to 3.30pm per working day. But a trading platform can execute more than a lakh trades in the same time given the broker’s servers hosting the platform being continually linked to the stock exchange in real time.
This implies massive savings in terms of cost of maintaining and training labor and associated infrastructure. The volumes on the exchanges caused by online trading can be expected to go on increasing in future. All it takes is a small registration fee and brokerage on top of the preliminary trading and demat accounts. The main hurdle to overcome is the lack of complete knowledge and wholesome awareness about investing, trading and markets in general amongst Indian masses.
A finance blogger with avid interest in equities, markets, commodities, currencies and ipos. I hold an important position in a reputed brokerage firm with its presence globally