What is Online Trading and How Does It Work

What is Online Trading and How Does It Work

Several decades ago, stock broking was the realm of a few exclusive individuals who appeared adept at transacting in stocks and shares. In previous times, when trading was only thought of as belonging to the rich and famous, those who weren’t engaged in the activity viewed it as apprehensive bystanders. Nowadays, everyone thinks they are stock brokers or investors. People who have never indulged in trading are eager to try their hand at it. What most people don’t know is that trading requires a whole lot of self-study and research before diving in. Even if you do all this, some basics ought to be learned about how to go about online trading. 

Understanding Stocks

These days, to find your way into the markets, all you need is a smart device and a trading account online. However, with the best Indian trading platform you may think you have access to, like Motilal Oswal, for example, you need to get your basics right. When you invest in, or buy a stock or share of a company, you own a part of it. If that company is small, it may expand and in its growth, you, the share or stockholder, will see profits. When this happens, shareholders get a portion of the profits called dividends. 

Access to Online Trading

The best Indian stock broker will give you the means to trade and buy and sell stocks through an online trading platform. The first thing you need to do is to get yourself a Demat account which is linked to a trading account. This can be easily achieved by a renowned brokerage like Motilal Oswal. Brokers purchase and sell shares and stocks via exchanges. Typically, they will charge you a commission to do this. A valued brokerage is licensed to trade in stocks via the exchange. It is possible for a broker to be on the physical trading floor or make trades through a phone call, or online electronically. Online trading is preferred by brokers and investors alike in this digital age. 

Now you have to understand a bit about an exchange and how online trading has links with it. Any exchange is similar to a warehouse. Consider it a place where people purchase and sell shares and stocks. In online trading, an order to buy or sell stocks is placed by brokers. Therefore, matches between buyers and sellers are made, as some traders wish to buy certain stocks, while others would like to sell them. All this happens online in an electronic way. Some examples of major stock exchanges are:

  • The National Stock Exchange 
  • The Bombay Stock Exchange 
  • The New York Stock Exchange 

Everything Electronic 

In the case of online trading or stock broking, instead of taking tips and advice, and using a human being to make your trades through, you are using a broking firm that has an electronic platform. An advantage of trading online is that you can be flexible, making trades online at any time and from any location. Some trading platforms also offer you virtual trading platforms that are simulations of actual ones, just to get a hang of online trading. You practise on these first, before getting into real-world action. 

Digital and Smart

The best online trading platforms, like Motilal Oswal, give you the means to be up to date with advancements of the digital age and be smart about investments. When you open a Demat account with Motilal Oswal, you take a step in the right direction towards a fruitful investment experience. 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account | Upcoming IPO | LIC IPO

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