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Online Share Trading Basics
About Online Share Trading
Gone are the days, when you had to fill up physical forms to buy shares and to stand in the long queues to submit it. Thanks to the internet, the buying or selling of shares has become quite easier. Now you can make your online share trading, with the help of a computer interface or even by a smartphone application. There are many such share trading apps on Apple's app store and Google PlayStore. Tradebulls is one of the leading online share trading portals that give you full control over your trading and aids you with ease of doing business. It has also brought transparency in the means of trading.
How to do share trading online
Online share trading is using a PC or mobile connected to the Internet for buying or selling shares. There is minimal human interaction in this process making it more cost-effective than offline kind of share trading.
Usually, the broker-customer interface has a three-tiered fee structure. If you want to buy many shares you can either do it by clicking a few buttons on your smartphone or you can call an automated phone line to make your deal. Different brokerage agencies have different fees that vary according to the payment gateway they are using or the fees levied by your bank. You can check the livestock prices on your phone screen and then buy it for the price you see on the screen.
You can also place a limit order while selling or buying shares in your portfolio. In a limit order, you set a price to pay. For example, if you wish to trade a share in Mahindra Automobile that is currently available for Rs 300 per share, if you wish to buy it when its price drops down at Rs 250, you can place a limit order to buy the desired number of shares for Rs 250 per share. You can also cancel it if you change your mind, but that happens only if you haven't reached that mark yet. The selling also works in the same way.
Steps to start your online trading portfolio
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First, you have to open a trading-cum-Demat account with your broker and enable internet trading while opening this account. You have to give the Power of Attorney to the broker so that your Demat account automatically be debited or credited when you trade shares online.
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After opening a trading account, you have to activate it via the allocated username and password.
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Though an online trading account will have a two-level authentication, you must change the allocated password at first. The two-level authentication includes the password and a secondary authentication that could either be a random-generated alphanumeric code or an OTP or a combination of questions.
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Now you have to fund your trading account via NEFT, RTGS, IMPS, Payment Gateway, or cheque/DD route. Once it gets credited with money, your account is ready to make trading.
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Once you trade a share or security, it shows up in the Order Book. You can modify or cancel it until it shows a 'pending' status. When the order is finalized, you cannot make any changes to it.
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You can also place a limit order if you want to automate the process of buying or selling shares when they reach a certain mark.
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Once you trade the shares, cross-check the trading, amount transaction and the price again, sometimes, in case of internet failure or network drops, your desired trading may remain undone, if that happens you can also call your broker to place the order on your behalf, almost all the brokers have this facility.
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The online share trading process is not just simpler but also the charges (fees) are comparatively lower than the offline way of trading. The statutory charges are almost the same in both tradings but one must be careful about hidden costs like liquidity costs, spread costs, volatility costs, etc. There might be some payment gateway charges in the online trading process. Sometimes, there could be bank charges involved in the process.
Beginners Guide for Stock Trading in India
You can become a successful trader if you keep a few things in your mind while you buy or sell shares online. Before you start trading, you need to know the trading environment. Here are a few essential things that you might consider to make profits:
- The Tradebulls is a perfect encyclopedia for the investors that showers immense wisdom in the shape of researches, reviews, and analysis. You can learn the basics and advances of trading here on our website.
- You can see some screeners of actual customers and artificial-intelligence-based data mining tools that can help you to choose the right share stocks for your trading portfolio.
- The best way to learn online share trading is to start with a small amount so that you can manage the losses involved in silly mistakes that you might make in the process of learning.
- Once you start to understand the trading interface you can escalate your trading values. There are some online stock market games too where you trade in a virtual kind of cash rather than putting your real cash at risk.
- You can also learn the online stock trading process by checking out the demo on our website. In this demo, the whole trading process is explained most simply, making it risk-free learning for our valuable customers.
How to invest in stocks online
Online trading is just like offline kind of trading, but with a technical internet-connected interface. It can include the trading of shares, bonds, securities, and futures. You can invest in stock online via an online brokerage agency. Here, you need not meet the broker face-to-face. An online brokerage account is comparatively fast, easier and cost-effective than the offline trading. You just have to pick your favorite set of shares, the number of shares and the price you want to buy at. Online share investment is loaded with complex tactics and strategies. The online trading interface makes it easier for you to assess the value of a certain company’s shares with the help of expert tips, live screeners and performance graphs, still, you need to cross-check the market value and reputation of that group before putting your hard-earned money at the stake.
What are the charges in online share trading?
When you trade on the internet, your costs are generally lower compared to offline trading. However, the other statutory charges remain the same irrespective of whether you trade offline or online. Apart from brokerage and statutory costs, there are also hidden costs like liquidity costs, spread costs, volatility costs etc, which are hard to quantify.
| Costs | Equity - Delivery | Equity - Intraday | Futures | Options |
|---|---|---|---|---|
| Brokerage | 0.1% to 0.4% | 0.02% to 0.05% | 0.01% to 0.05% | Flat per lot |
| Securities Transaction Tax (STT) | 0.10% | 0.03% | 0.01% | 0.05% on sell side on premium value |
| on Buy and Sell | on sell side only | on sell side only | ||
| Transaction / Turnover charges | 0.00% | 0.00% | 0.00% | 0.00% |
| of turnover value | of turnover value | of turnover value | of turnover value | |
| GST | 18% on Brokerage + transaction cost | 18% on Brokerage + transaction cost | 18% on Brokerage + transaction cost | 18% on Brokerage + transaction cost |
| SEBI Charges | 0.00% | 0.00% | 0.00% | 0.00% |
| of turnover value | of turnover value | of turnover value | of turnover value | |
| Stamp Duty | 0.01% | 0.00% | 0.00% | 0.00% |
It needs to be noted that the brokerage cost is variable and largely depends on the relationship and the size of the business. The other charges are only collected by the broker on behalf of statutory authorities and hence these won’t change. All these charges are explicitly mentioned in the contract note.
In addition, online brokers may charge for use of the payment gateway, although NEFT and IMPS transactions are free from the broker’s side, although there could be bank charges. There are DP charges which are also debited to the trading ledger and these include the annual maintenance charges (AMC), charges for debit to the demat account, charges for dematerialization of shares etc.
Difference Between Online Trading and Offline Trading?
Online Trading
Offline Trading
In Online Trading, you can buy or sell shares via a computer or mobile app.
In offline trading, you have to visit a broker’s office or branch office to trade shares.
The customer has full control over the share trading.
In offline trading, one has to rely on a dealer for execution.
You have to take care of your passwords, hardware, and software.
Such things are taken care of by the broker or dealer.
Confirmation of sales and buying it is immediate and real-time.
Time-lag issues happen in offline kind of share trading.
The process of funding the account and DIS issue is seamless.
The funding of the account and DIS issue is not seamless.
FAQs
Is it safe to trade online or are there risks in trading online?
The market risk is there is any type of equity trading and investing. You need to take extra care of online security. Here are a few pointers. For example, you must ensure your user name and passwords are kept safe and are also changed regularly. Avoid accessing your online trading account from cyber café or using a public wi-fi facility at malls / airports. These are not secure. Always use dedicated internet connection and ensure to log out of your session each time.
If I enter an MIS trade online, whose responsibility is it to close the trade intraday?
The responsibility of closing an intraday trade well before the close is on the trading client. Normally, brokers run their RMS around 3.15 pm to check of any open MIS orders and any open orders are automatically closed out at the best available price by the system. In case, the system is not able to close the transaction due to a technical glitch, the onus is still on the customer only.
Can I buy equity, ETFs, futures, options and currency derivatives online?
You can execute all the above transactions on a single online account itself. Of course, you need to do additional documentation for F&O activation like submitting your proof of income and risk capacity. However, all transactions including ETFs and currency derivatives can be bought and sold through the same trading account.
Is it possible to open an online trading cum demat account without paper work?
The process is called E-KYC wherein you can authenticate with your Aadhar card and open a trading demat account. The process is almost seamlessly online and can be completed from the broker website. Only the PAN card and cancelled cheque have to be scanned and uploaded online. All the other data is taken directly from Aadhar database with the help of OTP authentication. You only need to an in-person-verification (IPV) and send a physical copy of the Power of Attorney agreement on registered stamp paper.
What happens if my internet connection is down or the system is too slow?
Technology can be quite unpredictable at times and that is why Tradebulls provides the back-up call-n-trade facility. Here you can call up the call centre and put the trades on phone after appropriately authenticating yourself. This back up facility is a redundancy available to you in the event of any exigency.
