Index

Chapter 1. Introduction

1.1 What is online trading?

1.2 history and evolution of indian online trading

1.3 how its work?

1.4 what is demat account

1.5 depository participant

Chapter 2 research and methodology

2.1 objective of study

2.2 scope of study

2.3 limitation of study

Chapter 3 literature review

Chapter 4 data analysis and interpretation

4.1 how to open demat account

4.2 facilities offered by demat account

4.3

4.4 advantages of demat account

4.5 disadvantage of demat account

4.6 why you need to open demat account

4.7 what is difference between demat account and trading account

Imporatance of demat account

4.8 advantage of online trading

4.9 disadvantages of online trading

4.10 features of online trading

Chapter 5 finding conclusion and suggestion

5.1 finding
5.2 conclusion

5.3 Suggestion

Chapter 1. Introduction

1.1 What is online trading ?

Online trading is simply buying and selling assets through a brokerage's internet-based proprietary
trading platforms. The use of online trading increased dramatically in the mid- to late-'90s with the
introduction of affordable high-speed computers and internet connections. Stocks, bonds, mutual
funds, ETFs, options, futures, and currencies can all be traded online. Also known as e-trading or self-
directed investing.

Traditionally, investors and traders have to call their brokerage firms to make a trade for them. If
John wanted to purchase 50 shares of Intel, he would call his broker with a buy order request. The
broker would let John know the market price and confirm the purchase order. If the investor is
making a limit order, the broker has to confirm the limit price, how long to keep the order open for,
what account to purchase the shares in (if John has multiple investment accounts), etc. The
investment representative must also confirm the commission costs for making the trade. When all
has been established, the broker would place the trade in the system which is linked to trading floors
and exchanges, such as the New York Stock Exchange (NYSE) or the NASDAQ. The client would
receive a trade confirmation by mail and a monthly or quarterly statement of account showing a list
of his investments. If John wanted to transfer some cash from his trading account to his checking
account, and vice versa, he would also have to call in to make that transaction request.

Today, with the coming of the internet in the digital era, more and more investors are using online
trading platforms offered by their brokers for DIY (do-it-yourself) investing. The online trading
platforms serve as a hub with multiple tools for the investor or trader. The investor can place buy
and sell orders; place market, limit, stop, stop-loss, and stop-limit orders; check the status of an
order; view real-time stock quotes; read news on companies; view the list of securities currently held
through the dashboard; etc. An investor can also access his or her investment statements,
confirmation statements, and investment tax forms using the online system. Most discount
brokerages that are affiliated with banks also provide added convenience for their digital clients by
linking their bank accounts to their investment accounts. This way, an investor can easily initiate a
transfer between accounts held under the same financial institution.

1.2 history and evolution of indian online trading

Indian stock market marks to be one of the oldest stock market in Asia. It dates back to the close of
18th century when the East India Company used to transact loan securities. In the 1830s, trading on
corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading
was broad but the brokers were hardly half dozen during 1840 and 1850. An informal group of 22
stockbrokers began trading under a banyan tree opposite the Town Hall of Bombay from the mid-
1850s, each investing a (then) princely amount of Rupee 1. This banyan tree still stands in the
Horniman Circle Park, Mumbai. In 1860, the exchange flourished with 60 brokers. In fact the 'Share
Mania' in India began with the American Civil War broke and the cotton supply from the US to
Europe stopped. Further the brokers increased to 250. The informal group of stockbrokers organized
themselves as the The Native Share and Stockbrokers Association which, in 1875, was formally
organized as the Bombay Stock Exchange (BSE). BSE was shifted to an old building near the Town
Hall. In 1928, the plot of land on which the BSE building now stands (at the intersection of Dalal
Street, Bombay Samachar Marg and Hammam Street in downtown Mumbai) was acquired, and a
building was constructed and occupied in 1930. Premchand Roychand was a leading stockbroker of
that time, and he assisted in setting out traditions, conventions, and procedures for the trading of
stocks at Bombay Stock Exchange and they are still being followed. Several stock broking firms in
Mumbai were family run enterprises, and were named after the heads of the family. The following is
the list of some of the initial members of the exchange, and who are still running their respective
business:

• D.S. Prabhudas & Company (now known as DSP, and a joint venture partner with Merrill Lynch)

• Jamnadas Morarjee (now known as JM)

• Champaklal Devidas (now called Cifco Finance)

• Brijmohan Laxminarayan

In 1956, the Government of India recognized the Bombay Stock Exchange as the first stock exchange
in the country under the Securities Contracts (Regulation) Act. The most decisive period in the
history of the BSE took place after 1992. In the aftermath of a major scandal with market
manipulation involving a BSE member named Mr. Harshad Mehta, BSE responded to calls for reform
with intransigence. The foot-dragging by the BSE helped radicalise the position of the government,
which encouraged the creation of the National Stock Exchange (NSE), which created an electronic
marketplace. NSE started trading on 4 November 1994. Within less than a year, NSE turnover
exceeded the BSE. BSE rapidly automated, but it never caught up with NSE spot market turnover.
The second strategic failure at BSE came in the following two years. NSE embarked on the launch of
equity derivatives trading. BSE responded by political effort, with a friendly SEBI chairman (D. R.
Mehta) aimed at blocking equity derivatives trading. The BSE and D. R. Mehta succeeded in delaying
the onset of equity derivatives trading by roughly five years. But this trading, and the accompanying
shift of the spot market to rolling settlement, did come along in 2000 and 2001 - helped by another
major scandal at BSE involving the then President Mr. Anand Rathi. NSE scored nearly 100% market
share in the runaway success of equity derivatives trading, thus consigning BSE into clearly second
place. Today, NSE has roughly 66% of equity spot turnover and roughly 100% of equity derivatives
turnover. Stock Exchange provides a trading platform, where buyers and sellers can meet to transact
in securities.

1.3 how its work?

A share of stock is basically a tiny piece of a corporation. Shareholders -- people who buy stock -- are
investing in the future of a company for as long as they own their shares. The price of a share varies
according to economic conditions, the performance of the company and investors' attitudes. The
first time a company offers its stock for public sale is called an initial public offering (IPO), also
known as "going public."

When a business makes a profit, it can share that money with its stockholders by issuing a dividend.
A business can also save its profit or re-invest it by making improvements to the business or hiring
new people. Stocks that issue frequent dividends are income stocks. Stocks in companies that re-
invest their profits are growth stocks.

Brokers buy and sell stocks through an exchange, charging a commission to do so. A broker is simply
a person who is licensed to trade stocks through the exchange. A broker can be on the trading floor
or can make trades by phone or electronically.

An exchange is like a warehouse in which people buy and sell stocks. 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.

1.4What is demat account

You might have heard the word `Demat Account’ frequently in the past few years. If you’ve
wondered what is Demat Account, let’s explain it for you.

A Demat Account is a bit like a bank account for your share certificates and other securities that are
held in an electronic format. Demat account (short for Dematerialized account) is an account to hold
financial securities (equity or debt) in electronic form. In India Demat accounts are maintained by
two depository organisations, NSDL (National Securities Depository Limited) and CDSL (Central
Depository Services Limited). A Depository Participant (DP), such as a bank, acts as an intermediary
between the investor and the depository.

The Demat account number is quoted for all transactions to enable electronic settlements of trades
to take place. Access to the Dematerialized account requires an internet password and a transaction
password. Transfers or purchases of securities can then be initiated. Purchases and sales of
securities on the Dematerialized account are automatically made once transactions are confirmed
and completed.

1.5 depository participant

A depository (in simple terms) is an institution holding a pool of pre-verified shares held in electronic
mode that offers efficient settlement of transactions. A Depository Participant (DP) is an
intermediary between the investor and the depository. A DP is typically a financial organization like a
bank, broker, financial institution, or custodian acting as an agent of the depository to make its
services available to the investors. Each DP is assigned a unique identification number known as DP-
ID. As of March 2006, there were a total of 538 DPs registered with SEBI.

1.6 how does a demat account work

First of all, it is important to note that along with a Demat Account, you get a linked trading account
as well, with a unique login ID and password. This is used to buy/sell shares. A Demat Account is
then used to hold the bought shares.

So when you want to buy or sell a particular share, you need to login to your trading account, which
is also linked to your bank account. When a ‘buy’ or ‘sell’ request is put in the trading account for a
particular stock, with other details, your Depository participant (DP) then forwards this to the stock
exchange immediately.

In case, the order is to ‘buy’, the stock exchange then finds a seller who wants to sell the same
quantity of shares and sends an order to clearance houses to debit the particular number of shares
from the seller’s Demat Account and credit it to the buyer’s Demat Account. And this is how a single
trade in the stock market takes place.

The buyer and seller can hold Demat Accounts with DPs belonging to different depositories.
Chapter 2 research and methodlogy

2.1 objective of study

To know about share mareket

To know about how share market work

To

To

To

To

2.2 scope of the study

2.3 limitation of the study

Chapter 3

3.1Predicting and explaining the adoption of online trading: An empirical study in Taiwan

This study investigates how stock investors perceive and adopt online trading in Taiwan. We
developed a research model which integrates perceived risk, perceived benefit and trust, together
with technology acceptance model (TAM) and theory of planned behavior (TPB) perspectives to
predict and explain investors' intention to use online trading. The model is examined through an
empirical study involving 338 subjects using structural equation modeling techniques. The results
provide support for the proposed research model and confirm its robustness in predicting investors'
intentions to adopt online trading. In addition, this study provides some useful suggestions and/or
implications for the academician and practitioners in the area of online trading.

3.2 analysis of demat account and online trading by prof. Adil bade

Online trading is the new concept in the stock market. In India, online trading isstill at its infancy
stage. Online trading has made it easy to trade in the stock market as
now people can trade while sitting at their home. Now stock market is easily accessible by the peopl
e. There are some problems while doing the trade through the internet. Major problemfaced by
online trader is that the investors are loyal to their traditional brokers, they rely uponthe suggestions
given by their brokers. Another major problem is that the people don't havefull knowledge regarding
online trading. They find it difficult to trade themselves, as a wrongentry made by them, can bring
them huge losses.
Chapter 4

Demat account

A Demat account (short for Dematerialized account) is

an account to hold financial securities (equity or debt) in
electronic form. In India Demat accounts are maintained
by two depository organisations, NSDL (National
Securities Depository Limited) and CDSL (Central
Depository Services Limited). A Depository Participant (DP), such as a bank, acts as an
intermediary between the investor and the depository.

Procedures to open demat accocunt

Step 1. First select where you want to open a Demat Account and then select the Depository Participant you
want to open demat account with. Most brokerages and financial institutions offer the service.

Step 2. Then fill up an account opening form and submit along with copies of the required documents and a
passport-sized photograph. You also need to have a PAN card. Also carry the original documents for verification.

Step 3. You will be provided with a copy of the rules and regulations, the terms of the agreement and the charges
that you will incur.

Step 4. During the process, an In-Person Verification would be carried out. A member of the DP’s staff would
contact you to check the details provided in the account opening form.

Step 5. Once the application is processed, the DP will provide you with a demat account number and a client ID.
You can use the details to access your demat account online.

Step 6. As a demat account holder, you would need to pay some fees like the annual maintenance fee levied for
maintenance of the demat account and the transaction fee -- levied for debiting securities to and from the account
on a monthly basis. These fees differ from every service provider (called a Depository Participant or DP). While
some DPs charge a flat fee per transaction, others peg the fee to the transaction value, and are subject to a
minimum amount. The fee also differs based on the kind of transaction (buying or selling). In addition to the other
fees, the DP also charges a fee for converting the shares from the physical to the electronic form or vice-versa.

Step 7. Minimum shares: A demat account can be opened with no balance of shares. It also does not require that
a minimum balance be maintained.
WHAT ARE THE DOCUMENTS REQUIRED TO A DEMAT ACCOUNT?
To open a demat account, you need to submit proofs of identity and address along with a passport size
photograph and the account opening form. Only photocopies of the documents are required for submission, but
originals are also required for verification.

Here is a broad list of documents that can be used as proofs for demat account opening

A. Proof of Income
You may submit any one of these as a proof of income:

A photocopy of the Income Tax Return (ITR) Acknowledgement slip submitted to the Income
Tax Department during tax filing.

Certificate of Net Worth or photocopy of the annual statement of accounts authenticated by a

Chartered Accountant.

Salary Slip of the current month or Form 16.

A statement of Demat Account holdings with an eligible Depository Participant.

Latest statement of bank account containing the income history of last 6 months.

Any documents that prove ownership of assets through self-declaration.

PROOF OF IDENTITY

You may submit any one of these as a proof of income:

PAN card having a valid photograph.

Aadhaar card / Voter ID card / driving license/ Passport.

Identity card having applicant’s photo which is issued by Central/State Government and its
Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled
Commercial Banks, Public Financial Institutions, University affiliated Colleges, Professional
Bodies such as ICAI, ICWAI, ICSI, Bar Council, and Credit/Debit cards issued by Banks

PROOF OF ADDRESS

You may submit any one of these as a proof of income:

Passport/Voters Identity Card/Ration Card/Registered Lease or Sale Agreement of

Residence/Driving License/Flat Maintenance bill/Insurance Copy.

Utility bills like landline telephone bill, electricity/gas bill which is not more than 3
months old.

Bank Passbook which is not more than 3 months old.

Self-declaration of new address given by judges of High Court and Supreme Court.

Address proof which is issued by bank managers of Scheduled Commercial

Banks/Scheduled Co-Operative Bank/Multinational Foreign Banks, Gazetted Officer /
Notary public, Member of Legislative Assembly, Member of Parliament.

Identity card containing address which is issued by Central/State Government and its
Departments, Statutory/Regulatory Authorities, Public Sector Undertakings,
Scheduled Commercial Banks, Public Financial Institutions, University affiliated
Colleges, Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council.

Address proof given in the name of the spouse

2. What are the facilities offered by a Demat

Account?
Transfer of shares
A Demat Account is used to transfer share holdings of an investor. It can be done by
using a Delivery Instruction Slip (DIS) in order to conduct share trading. You can provide all
the relevant details in this slip for smooth execution of a transaction.

Loan facility
The securities held in your Demat Account can give you access to a variety of loans from the
bank. You can pledge these securities as a collateral to secure a loan from your bank.

Dematerialization & rematerialization

If you have a Demat Account, then conversion of the securities into different forms becomes
a simple task. You can give necessary instructions to your depository participant (DP) for
dematerialisation i.e. to get the physical share certificates converted into electronic form.
Conversely, you can get the electronic securities converted back to the physical form as per
your requirement.

Multiple access options

Owing to electronic operation, a Demat Account can be accessed using numerous media.
You can conduct investing, trading, monitoring and other security related operations using
facility of the Internet on a computer, smartphone, or other handheld devices.

Corporate actions
Having a Demat Account can help you avail benefits associated with owning securities.
Whenever a company provides dividends, interest or refunds to its investors, all the Demat
account holders get access to these benefits automatically. Additionally, corporate actions
related to equity shares like stock split, right shares or bonus issue is updated in the
shareholders’ Demat Accounts.

Speed E-Facility
The National Securities Depository Limited (NSDL) keeps extending various facilities for
the Demat account holders. Instead of physical submission of the slip, the account holder
may send instruction slips electronically to the depository participant. It is done to make the
process faster and less cumbersome.

Advantages of demat account

Lower risks:

Physical securities are risky due to thefts, losses, or damages. In addition, bad
deliveries or fake securities pose further risks. These risks are completely eliminated
with the opening of a Demat account, which provides holders with the option of
holding all their investments in electronic form..

Easy holding:
Maintaining physical certificates is a tedious job. Moreover, keeping track of their
performance is an added responsibility. Demat account holders can make it more
convenient to hold and track all their investments through a single account.

Odd lots:
With physical certificates, buying and selling were possible only in the specified
quantities. The convenience of dealing with odd lots or single security was also not
available. Demat accounts eliminate this issue.

Reduced costs:
Physical certificates involved several additional costs, such as stamp duty, handling
charges, and other such expenses. These extra expenses are completely eliminated
with Demat accounts

Reduced time:
Due to the elimination of paperwork, the time required in completing a transaction gets
reduced. The reduced time requirement enables the account holder to make more
purchases and sales of security holdings in a shorter time and with greater efficiency.

Disadvantages
Although demat accounts have simplified the lives of investors, there are some
disadvantages of demat account which you cannot ignore. 5 of the primary disadvantages
are listed:

Annual maintenance charges

When you talk about how to open demat account, the first thing that strikes your mind is the
annual maintenance charges or AMC associated with the account. It can easily be
considered to be one of the disadvantages of demat account. Even if you have a single
share in your name, you have to pay the annual maintainance charges, which can
sometimes be greater than the rate of the single share held in your name. this charges
varies from one broker to another.

However, there are stockbrokers or bank who provide a lifetime free demat account or even
a lifetime maintenance charge for demat account . thus take your time and choose your
demat account wisely

2. tech savvy

Share trading has become completely electronic. This means that you will to use your
computer in order to trade in the share market. Even when it comes to checking your
shareholdings, your portfolio, and your demat account in general, you have to be tech-savvy.
Without proper computer knowledge and skills, you will find it very difficult to operate a
demat account. It is also suggested to keep a check on your demat account on a periodic
basis to avoid any wrong transaction. If you have never used computer, all of this will seem
like an uphill task for you. Of course, you can chose the route of using the call and trade
facility. However a lot of times, a lot of time is wasted in these calls and this wastage of time
leads to missing out on potential profit-making opportunities. Thus, you will have to be able
to understand how trading platforms work. This is one of the major disadvantages of the
demat account.

3. high frequency of share trading

Due to the dematerialization of shares, trading in share market is just click away. This often
makes you check the stock price online, which was not the case when the shares wrew in
physical forms. As a result of this, your tendency of investing for a long-term vanishes and
you generate a habit of trading more often. This may often lead to losses in the share
market, which can eventually discourage you from investing in the company shares. the best
way to avoid such practices is to be patient and wait for a period of time before trading
again in the share market

4. additional contracts

Some depository participants may include additional contracts at different levels in order to
complete the process of dematerialization. This may often prove to be a complex process
from an investor point of view and one of the disadvantages of demat account.

5. regular supervision of your stockbroker

Different stockbrokers have the ability to operate the market. As the holder of a demat
account, you have constantly supervise the actions of your broker so that there are no wrong
transaction from your demat account without your knowledge. Although the disadvantages of
demat account may demotivate you from opening a demat account in order to trade in the
share market.

Why do you need a Demat account?

The conversion of physical securities to electronic form is optional because an
investor is allowed to hold securities either in physical or electronic format. However,
monitoring of physical certificates is more difficult compared to its dematerialised
counterparts.

Additionally, it is difficult to buy or sell securities in physical form. The number of

agents dealing in physical shares, as well as the number of buyers willing to
purchase physical shares, is much less as compared to the individuals transacting in
dematerialised securities.

imp

Much Safer: Earlier when there were no demat accounts, the physical form of shares were
very difficult to store and maintain. There was always a risk of it being misplaced, stolen or
damaged. But with stocks being maintained in an electronic form in demat accounts, our
investments are much safer. Additionally, there are extra layers of securities, regulations and
statutory compliances that make demat accounts a much safer option.

Indispensable for Trading: You cannot trade in the stock market if you don’t have a demat
account. Since stock trading is done electronically, unless you have a demat account for
buying and selling publically listed shares, you won’t be able to carry out any transactions. It
is mandatory to settle trades in a demat form (electronically) on any stock exchange.

Multiple Securities Under One Roof: It can be extremely confusing for investors to
maintain separate accounts for various financial products like debt securities, equity, mutual
funds and so on. A demat account takes this hassle away from the investors and allows
them to preserve multiple securities in one single account. This makes it easier to keep a
track of all the financial products under one roof.

Flexible Workplace: Demat accounts come with multiple accessing options as they can be
operated electronically. This means you can buy, sell or simply monitor your investments
from anywhere. You don’t have to even sit in front of a computer necessarily and can access
your record using a laptop, smartphone, tablet or other such smart devices. You can trade
while being on the move and don’t have to stick to sitting in front of your computer at the
office premises.

Quick and Convenient: Dealing with physical securities would involve a visit to your broker
every time you wanted to buy or sell shares. But since demat accounts operate
electronically, you are no longer required to make frequent visits to your broker and it can all
be done online within a fraction of seconds. Also, there are no chances of any manual errors
that may happen in case you want to transfer your shares in someone else’s name as the
processes are now electronically handled.

Types of demat account

There are 3 main types of demat accounts:

Regular Demat Account:

A regular demat account used by investors residing in India.

Repatriable Demat Account:

A demat account used by NRIs under which funds can be transferred abroad. This type of demat
account requires an NRE(Non-Resident Rupee) bank account associated with it.

Non-Repatriable Demat Account:

A demat account used by NRIs under which funds cannot be transferred abroad. This type of
demat account requires an NRO( Non-Resident Ordinary) bank account associated with it.
online trading

Online trading is the act of purchasing and selling financial products on the Internet. The trader buys
and sells using an online trading platform. Online trading may include trading in bonds, stocks
(shares), futures, international currencies, and other financial instruments.

Most people trade online through an online broker. An online broker is a brokerage firm that offers
its services on the Internet. Unlike traditional brokers, the investor does not meet the broker face-
to-face or via the telephone. Everything happens on the web.

Features of online trading

1Security

Every client is provided with a User Name and Password with 128 bit encryption along with a virtual
keyboard to provide the highest level of security.

2Multiple bank payment gateways

Transfer money online real-time to benefit from price movements in the market. Current payment
gateways:, HDFC Bank, Axis Bank, State Bank of India, ICICI Bank, Federal Bank & Oriental Bank Of
Commerce.

3UPI Transfer

Enjoy benefit of instant credit using UPI transfer facility which is available across all major banks.

4Reduced Brokerage

Brokerage fees are very competitive and fair.

5 Other Investment Products

Access to IPO’s, Mutual Funds & Bonds in a single click.

6 Portfolio Margin System

FAO Span Margin is calculated in real time. Hedging positions are identified correctly in this system

7 Customized Services

Subscription services are available for daily research and recommendations, daily demat holdings,
market tips and daily calls via SMS. And much more

4.8 advantage of online trading

1. Lower fees

One of the clearest advantages of online trading is the reduction in transaction costs and high fees
associated with traditional brick-and-mortar brokerage firms. Typically, you’ll pay between rs5 and
rs10 to buy and sell stocks and exchange-traded funds at online discount brokerages.

2 You can monitor your investments anytime

Online trading allows you to buy or sell shares according to your convenience. It offers advanced
interfaces and the ability for investors to see how their money is performing throughout the day.
You can use your phone or your computer to evaluate your profit or loss.

3. Ability to avoid brokerage bias

By taking trading into your own hands, you can eliminate brokerage bias. Bias sometimes occurs
when a broker gives financial advice that benefits the broker — such as in the form of a commission
for selling specific mutual funds and other products.

4. Better understanding of one’s money

This is a hidden advantage of online trading which you wouldn’t want to pass up on. Just like
conventional stock trading, you can predict the market behavior and use this to predict a rise or fall
in price of the stock. You’ll be handling your own finances and be responsible for them. Over
time, you become more experienced in understanding the market, and good investment
opportunities from the bad ones. This knowledge about money is very useful, and having this on
your resume makes you more marketable to companies looking to fill a well-paying position in the
finance department. So while making a quick buck, you also manage to become financially smarter,
in both your professional and personal

5 Faster Transactions

Online banking is fast and efficient. Funds can be transferred between accounts almost instantly,
especially if the two accounts are held at the same banking institution. All it takes to be able to buy
or sell stocks is a single click of the mouse. Through this, a quicker exchange can be made which may
also ensure quicker earnings.
6 Single Accessibility:

By opting for the best trading account in India, investors can procure accessibility to all the stock
exchanges across the country through a single platform. Some of these exchanges include the
Bombay Stock Exchange (BSE), the National Stock Exchange (NSE), Multi Commodity Exchange
(MCX), and the National Commodity and Derivatives Exchange (NCDEX).

7 Multiple Media:

Placing orders through the online account is beneficial in streamlining the entire process. The
different ways of accessing the account allow an investor to trade during market hours as well after-
market hours, if the need so arises.

Disadvantages

1. Easier to invest too much too fast

Because online trading is so easy — you basically push a button — there is the risk of making poor
investment choices or overinvesting.

2. No personal relationships with brokers

From getting help on how to create an investment strategy to understanding how the results of
feedback mechanisms affect the market, online traders are left to their own devices. For some, this
kind of autonomy can be unsettling.

3. Addictive nature

From getting help on how to create an investment strategy to understanding how the results of
feedback mechanisms affect the market, online traders are left to their own devices. For some, this
kind of autonomy can be unsettling.

Online traders can experience a certain high when trading that is similar to what people experience
when gambling, according to a recent study on excessive trading published in the journal Addictive
Behaviors. The study noted that some investors choose short-term trading strategies that involve
investing in risky stocks offering the potential for large gains but also significant losses. “The
structure itself of the two activities (gambling and trading) is very close,” the study concluded.

4. Internet-dependent

The nature of online trading means that, ultimately, you’re at the mercy of your internet connection.
If the internet connection is too slow or is interrupted, you can lose out on a potentially important or
lucrative trade.
5. Buying errors due to computer missteps

With online trading, to simply assume a trade was not completed can cost you money. Investors who
believe their trade was not completed might make the trade again and end up investing twice as
much as they intended. Assuming a trade was completed without seeing confirmation of the fact
also is a mistake. Make sure you understand how to verify trades and review statements before you
begin using an online investing system.

6 online broking fees

The other disadvantage is regarding the fees of the online brokers. As some online brokers charge
apathy fees from traders. If you trust them without enquiring about them, it will prove to be a big
loss for you.

7 appropriat knowledge

An investor can suffer from a big loss, if they don’t have the appropriate knowledge of how to buy
and sell the shares.

TYPES OF ONLINE TRADING

Trading can be split into three

distinct categories. These
include short term, medium
term and long term trading.

 Short term trading

usually refers to trading
that lasts up to a few
weeks.
 Medium term trading lasts for a few weeks to a few months.
 Finally, long term trading involves holding securities for months and
even years.

Types of online trading as follow

Day Trading

Day Trading is one of the most common forms of trading. It’s a short term
strategy where you buy and sell securities on the same day. Traditionally
this type of trading was normally carried out by professional traders. In
recent years improvements in technology and the emergence of a wide
range of online CFD trading websites means non-professional traders can
also trade in these types of securities.

Position Trading

Position trading is a longer term strategy where traders buy and hold
securities for longer periods of time. This type of trading often involves
keeping securities for weeks and even months. The decisions to buy and sell
are normally based on extensive research of market trends and predicting
changes in the market in the future. The trader buys at the beginning of a
trend and sells when the trend reaches is height.

Swing Trading
During certain stages of a trend, Swing Trading often takes place. This type
of trading takes advantage of the price ‘swings’ that occur during certain
stages of the lifecycle of a particular trend. Traders try to predict highs and
lows during a trend based on their research and data they collect for a
specific security. Unlike day trading, Swing Trading involves keeping
trades for more than a day to maximize the gains made when a trend gains
momentum. Once again this type of trading depends on a trader’s
judgement and accuracy of data they base their decisions on.
3. What is the difference between a Demat
Account and a Trading Account?

a. The functionality of a Demat Vs a Trading Account

One major difference between the two accounts pertains to the functions each performs. A
trading account is used for the buying and selling of the securities by means of it getting
debited from your demat account and sold in the market.
A demat account, on the other hand, allows investors to keep their financial instruments in
an electronic format. This also works in a way where you can change your electronic format
securities into physical form as well.

b. The nature of the two accounts

A trading account functions in the same way as your current bank account would; it in fact,
links up your demat and your bank account. It works to sell your shares in the market by
withdrawing it from your demat account.

Demat account is the place where the shares and securities that you buy from the market
are stored. Unlike a trading account that functions like a current bank account, a demat
account works like a saving account.

c. The role of the two accounts

Both these accounts, as different as they may be, are crucial for any trading in the share
markets. When, as an investor, you buy the shares of any company, you use the trading
account to do so. The money is debited from your bank account and the shares are reflected
in your demat account where they are also credited. Similarly, when you sell your shares
through your trading account, the same gets debited from your demat account and are then
sold in the market. The proceeds of this sale is credited back to your bank account.
Thus, in order to trade in the stock markets, it is mandatory to have both a demat as well as
a trading account.
Finding

Demat accounts are simple, fuss-free and extremely lucrative. In today’s day and
age, they are a must for financial planning.

The importance of demat account cannot be emphasised enough when we talk about trading
in the markets today. If you want to make your share trading experience easier and more
convenient, you must definitely open a demat account. They are fuss-free, extremely
lucrative and a must for financial planning.