How does Online Stock Trading work?

In Online Trading, trades are executed through an online trading platform (trading software) provided by the online broker. The broker, through their platform offers the trader access to market data, news, charts and alerts. Day traders who want real-time market data are provided level 1.5, level 2 or level 3 market access. All trading decisions are made by the trader himself with regard to the market information he has. Often traders can trade more than one product, one market and/or one ECN with his single account and software. All trades are executed in (near) real-time. In return of their services online brokers charge trading commissions (which is often very low - discount commission schedules) and software usage fees.

Online Trading Popularity In India

What are the advantages of Online Stock Trade?

You can get real time Stock Trading without calling or visiting broker’s office.
You will get real time market watch, historical data.
Investment in IPOs, Mutual Funds , Stocks and Bonds.
Place offline orders for buying or selling stocks.
Customer service through Email or Chat.
Trading is Secure.

What are the disadvantages of Online Stock Trade?

Website performance - sometime the website is too slow or not enough user friendly.
Little long learning curve especially for people who doesn’t know much about computer and internet.
Brokerages are little high compared to stock brokers.

Recommended Resources on Online Trade

The four golden rules of trading in one invaluable book by Robert Roth, Trader X., Jerold Roth Technical trading online

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