Pros and Cons of online trading account

Gone are the days when you have to call up your share broker for buying or selling stocks. There is now online trading account through which you can buy or sell stocks, mutual funds, bonds, derivatives, currencies. These are online brokers through which any person who wishes to invest in stocks can purchase it by himself. Offline or traditional trading where all transactions are happening through phone calls and physical delivery slip. for each transaction, you have to give a signed delivery slip to your broker. This was the days when no any other resources were available. But now the scenario has changed, people are moving from offline to online share trading platform. There are many benefits of online share trading platforms, but at the same time, there are also some problems with online share trading platforms. Let’s understand the pros and cons of online trading account.

What is online trading account?

In the online trading, the entire transaction is happening through the internet and on the servers directly. The person doing the transaction has the control over it. You don’t need to call up your broker for buying/selling any stocks, you can do it yourself. You are not bound by time and place as long as you have an internet connection. One step further, there is now a mobile app for doing such transactions over a mobile. Let’s see the benefits of online share trading account.

It’s cheaper

The online trading account is far cheaper than the traditional one. Traditional or offline brokers are still charging 1% of brokerage on the transactions done through them. In the online trading account, the brokerage is as low as 0.01% or even a fix amount of rs. 15-20 per transaction.

You can monitor your account on the go

Through online trading account, you can have the complete access to your account and you can monitor your positions anywhere anytime. You can track the real-time performance of your stocks on the go.

You have the control

In the online account, you can do transactions by yourself in real time. You don’t have to call up your broker. Many times it happens when you want to buy a stock at a certain price and you have to call up your broker for doing a transaction on your behalf, the phone line is busy and you may miss the opportunity. You can also place limit orders by yourself so when the particular stock hits that price, your transaction will be done.

Faster transaction

Funds transfer through online account will be much faster and real-time. You can withdraw your money at any time during the banking hours and money will be transferred to your bank immediately.

Opportunity to learn stock market by yourself

This is the hidden benefit. You can select stock by yourself and for doing so you will learn to pick the good stocks by yourself. You will be handling your own money and will be responsible for it. I am sure here you will contemplate all the available shortlisted stocks and choose the best one for yourself. You can educate yourself on the investment options.

Now let’s have a look at the other side of the coin.

Speed is risky

As online trading is so easy, you just to push a button and your money is gone. You have to be extra careful while doing online transaction as it will not give you second chance. The computer is emotionless and simply react to your action. It will not alert you even if you are making a mistake. Before you know what went wrong, you lost huge money.

You will lose an advisor and a friend

In the online trading account, you are alone. There is no broker to help you if something goes wrong. There is no one to guide you in your investment decision and strategy. You will miss an expertise of the broker who can help you in making right decisions.

Dependency on internet

In online trading, you are completely at the mercy of internet connection. If the speed of internet is very slow or is interrupted you are stuck. You may lose an important or lucrative trade opportunity.

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Vishal Jhaveri is an avid finance blogger with vast experience in various financial markets like Stocks, Mutual Funds, Insurance, and Personal Finance. He believes that personal finance is a subject we aren’t taught in our schools. Earning is important to have a good sustainable life for yourself and your family. but you must acquire financial knowledge to create real wealth. Disclosure: All content provided on this website is for informational and educational purposes only and is not meant to represent trade or investment recommendations.

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