What is online trading in securities?

Online trading in securities refers to the facility of investor being able to place his own orders using the internet trading platform offered by the trading member viz., the broker. The orders so placed by the investor using internet would be routed through the trading member.

    How to open an online trading account?

You have to short list a broker and visit his office. Account opening includes doing a KYC, and if you have a demat account and a savings bank account your account will be activated and you could start trading / investing.

    How online trading is different from offline trading?

Not very different. In offline trading you would be placing the orders on telephone or by physically going to the broker’s office. In an online trading platform you place the order on the broker’s system – which is then placed in the market. The chances of making mistakes are higher in online for a customer not very experienced in using technology and in understanding how markets work. So first learn with small trades, and preferably going to a branch.

    What are safety measures an online investor must know?

Investor has to take care that:
1. The Default password provided by the broker is changed before placing of order.
Ensure that password is not shared with others. Change password at periodic interval.
2. He has understood the manner in which the online trading software has to be
operated.
3. He has received adequate training on usage of software
4. The system has facility for order and trade confirmation after placing the orders

    What are the documents required to open an online trading account?

The same documents that are required when a person does a Kyc. Residence proof, PAN – are mandatory. One photograph and an agreement between you and the broker – to be executed on a stamped paper. Once all these papers are in place an account is opened within 3 working days.

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  1. an agreement between you and the broker – to be executed on a stamped paper.

    This is the problem I feel. Most brokers take some sort of power of attorney on this stamp paper – mine included. Their take, they need it to execute trades on my behalf.

    Though I keep an eye on any strange transactions and it has never happened in last 5 years I have been using their services but it is no guarantee that it will not happen in future.
    Subra: Any comments on this?
    I have asked around and it looks like all big brokers like ICICI, sharekhan, sbi etc are using it. So, there is at least some consistency on this front. 🙂

  2. @Shivam

    I have invested/traded with HDFC, ICICI, Angel Broking, Nirmal Bang and VNS Finance/TradeSmartOnline.

    HDFC and ICICI are banks and hence have very high minimum brokerage (Minimum Rs. 25/- and above depending on the order). So your every order needs to be more than Rs. 5000/- for breakeven. If you are a retail investor, I won’t recommend these.

    Angel Broking and Nirmal Bang being brokers have attractive brokerage rates. But problem with them is they never allow you to think yourself. You will get 4-5 calls every day with some stock recommendations (for which they don’t have any rationale and they too don’t know why they are recommending these stocks)! They will also force you to sell your profit making stocks in order to book profits (which ideally you should let run with trailing stop). Their aim seems to generate brokerage from you rather than helping you invest for long term 🙁

    I am currently investing with VNS Finance (or TradeSmartOnline both are one and the same. It’s only the different name of the broker). Benefit of investing/trading with them is as follows.

    1. Competitive brokerage rates (they have 3 plans, you can choose what suits you) .
    2. They never call you with any recommendation. Even if you empty your trading account, no single question whatsoever!!!
    3. They are integrated with NOWONLINE. If you have any smartphone, you can access your account using NSE Mobile application (from NSE) which is very light on data, memory and is very user friendly.

    PS: I am not associated with any broker other than I have trading accounts with them. Also, I won’t benefit if you open account with any of them 🙂

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