Buying and Selling of shares is called share trading. Mainly there are two ways of doing share trading.
- Online Share Trading.
- Offline Share Trading.
Doing share trading with help of computer, internet connection and with trading/demat account is called Online Share Trading.
If you would like to do online share trading then you should have a computer, internet connection and online trading account.
ESSENTIAL OF ONLINE TRADING
Online trading account : You have to open an online trading account with any of the bank or financial trading system like ICICIdirect.com, 5paisa.com, Sharekhan.com etc. Their will be nominal annual charges. These charges vary from bank to bank but should not be more than Rs.1000 annually.
After successfully opening the online account you will receive the username and password with the help of which you can login in online trading system and trade yourself.
The trading system executive (with whom you opened trading account) will help you initially about how to use the online trading system.
Once you get familiar with the system then you can trade yourself at your home or in the internet cafe.
Now-a-days you can get internet enabled on your cell (which is called GPRS) whose speed will be sufficient to do trading and also the charges of GPRS are very nominal.
ADVANTAGES OF ONLINE TRADING
No need to depend on any broker or anybody else to place the order or to square off the order. In short you are the boss of yourself to do trading of shares.
It’s reliable, convenient and you can take your own decisions yourself by actual selling or analyzing the market on the computer screen instead of calling broker all the time and getting news about the market.
It’s not possible or practical for a broker to update you about each and every news of the market or any news which will influence or affect the share market. Because he may be having many other customers like you and even if he updates you by that time the news have been affected the concerned sector or share. So if you are doing online trading yourself, then you may save yourself from big disaster. You will get news and updates on various websites and also on your online trading system and most of the information will be free of cost. Always remember share market always get influences (or affected) by the appropriate news. So get updated or be in touch with news all the time. This will benefit you always.
By doing online trading yourself, you can see and judge where market (or your share) is heading by seeing different graphs online yourself, which is not possible if you’re trading through broker. Some online trading systems have graphs integrated in their system, so your job is to just add those graphs and check the status of current market (or share) (graphs will be discussed later). And depending on your analysis you can take steps towards your successfully trading. (How to analyze graphs will be mentioned later).
All your transactions and related documents can be seen online and can also be downloaded to your PC without depending on your broker. You can also check the status of your amount on daily basis through you online trading system.
DISADVANTAGES OF ONLINE TRADING
In online trading system you may face problem of disconnection to internet due to which you will not be able to login to your online trading system and hence you can’t do trading yourself. At such critical times you have to call trading system executive and do trading or square off your transactions.
If may face other problems such as electricity cut-off, PC problem etc during online trading then immediately you have to contact your trading system executive and place orders or do trading.
OFFLINE SHARE TRADING
Doing share trading with the help of broker or through phone is called Offline trading.
In other words trading will be done by another person on your behalf based on the instructions given by you, and then the other person can be a broker. The broker will do buying and selling of shares on your behalf depending on the instructions given by you.
If you want to do offline share trading then you need to open the demat account.
DIFFERENT METHODS OF BUYING AND SELLING
Following are the types of orders which are used for buying and selling of shares.
MARKET ORDER
When you put buy or sell price at market rate then the price get executes at the current rate of market. The market order get immediately executed at the current available price. In market order there is no need to mention the price; the shares will get executed at the best current available price. If you wish to buy or sell shares at any specific price then market order is not suitable for you then you have to go for limit order. Market order is for those who want to buy or sell immediately at the current available price.
LIMIT ORDER
It’s totally different to market order. In limit order the buying or selling price has to be mentioned and when the share price comes to that price then your order will get executed with the mentioned price by you. But here it’s not sure that the price will come to your limit order. In day trading its risk because you have to close all your transactions before 3:30 p.m. and if in case price doesn’t reach to your limit order then your order will be open and then you have to go through (bare) the heavy penalties.
Importantly limit order and stop loss trigger price are used together.
STOP LOSS TRIGGER PRICE
Stop loss and trigger price are used to reduce the losses. This is very important term especially if you are doing day trading. Stop Loss as the name indicates is used to reduce the loss.
