By: Hem - 08-Mar-2022

10 Things You Need to Know About Online Trading In India

The number of people trading online in India has grown exponentially in the last decade. A fast and cheap internet connection, availability of computers & smartphones and learning material have all made it possible. If you are also thinking about starting online trading in India, here are ten things you need to know.

Choose your stockbroker wisely

If you are going into online trading in India, you can associate with a brokerage firm. It is essential to choose the right broker. Check which broking house offers you the best rates for the stocks options you are thinking to buy. Also, check their commission rates and transaction fees.

Review your stockbroker’s privacy policy

Every stockbroker has made different rules and regulations for their clients to use the trading platform. Therefore, before joining them, you should read their privacy policy so that you don’t have to face any problems in future. Your broking house should not sell out your name, contacts and bank account information to third party companies.

Create a detailed plan about online trading

Everyone in the share market wants to make a profit, but they need to have a detailed plan for this. In online trading, you can see the changes in the prices of the stocks anytime you want. Therefore, you have to make a detailed process plan that encompasses how much risk you are willing to take per trade or in a day and how you will select the stocks. Also, set a limit to stop trading and return to make the next plan.

Prepare well before trading

As an online investor, you must have adequate knowledge about the stock market, company resorts, macro research, sector views, etc. You can make a list of domestic and global cues that will impact the prices of the stocks you will buy. You need to keep this list with you because it will help you understand how the RBI rate hike or Fed rate cut will impact your bought stocks. To implement your trading conveniently, do not buy more than 20 stocks at a time.

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Real-time update on stock prices

One of the most significant advantages of online trading is that investors get real-time updates about stock prices. In trading, if there is a slight delay from your side in placing orders, it could end in significant losses. Therefore, in online trading, the feeds should be in real-time for you to see and make a quick decision at the right time.

Do not compromise with your security

In online trading, security is one of the most important things. Therefore, if you start online trading in India, you should update your anti-malware and antivirus software. Avoid downloading any doubtful and strange software or games on your computer or smartphone to keep your trading system safe at all times. Also, use the dual authentication process of trading and create a strong password that is hard to break. If you are using a mobile app, make sure you have downloaded it from a trusted gateway. Also, avoid using public Wi-Fi at airports, metro stations, malls, etc.

Don’t get excited about every trading news

As an online trader, you always stay connected with the internet. It has its advantages and disadvantages. The benefits include easy access to all the information, news and insights at any time you want. However, it also increases the chances of exposing yourself to many trading moves and ideas that may look very promising and enticing. That is where you need to keep your thinking straight and stick to the plan you have prepared for yourself.

Keep yourself aware of visible and invisible costs

Online trading is always convenient and available to you at a low cost compared to traditional trading. However, there are many broking houses, and their service charges are also different. To maximise your profit, evaluate your trading costs as per your brokerage and the other statutory fees. Also, look for invisible costs like volatility, liquidity, basis risk, and missed opportunities. You need to have complete knowledge of all visible and hidden costs before you jump into online trading in India.

Use modern tools and technology to avoid higher losses

If you are going into online trading, you will have a lot of advanced tools available at your trading platform that will help you stop going into higher losses. You can assign a stop order on the stocks you have bought, so when the stock price reaches the stop price, it will execute a sell order, and the stocks will be automatically sold for that price. You can make different stop strategies for various stocks and use them to limit the losses effectively.

Don’t always go for falling prices

In online trading, traders get real-time updates about the stock prices, enticing them to make hasty decisions that can result in a loss. In most cases, investors tend to buy those stocks whose prices have dropped. The reason behind this is that they think they can buy these stocks at a lower price and sell it tomorrow when their price goes up, but this is not always the case. They should analyse why the stock prices of a particular company are falling down and then plan their next move. They need to realise that the prices at which they have bought the stocks do not necessarily promise higher value in future.

After reading this article, you must have gained detailed knowledge about online trading. In India, the service of online trading is offered by various broking houses. Hem Securities provide one such broking house. The company has been operating in the financial market for the last 40 years and has successfully served more than 1 lakh clients. It also offers its trading platform that allows clients to trade in equities, commodities, derivatives, currencies, etc. So, let Hem securities be your online trading buddy!