- The Basics of Digital Gold
- Difference between Investing and Trading
- What is online trading?
- Benefits of online trading
- How to start an online trading portfolio
- Difference between online and offline trading
- What are trading platforms?
- How to do online trading?
- What is fundamental analysis and how to do it?
- What is technical analysis and how can you do it?
- How to select best stocks for trading?
- Show all articles
Difference between online and offline trading
With the wide uncompromised popularity of the internet and computers, offline trading has become a concept unheard of. However, before online trading facilities were there, trading was only done offline. In offline trading, you place your order to a broker who then buys or sells the shares for you. Your broker plays a crucial role here. Offline trading can be cumbersome, and there are several drawbacks associated with it, which is why people now, tech savvy or not, prefer online trading.
- Online trading is a simpler digitized version of offline trading. It is simply buying and selling assets through a brokerage's internet based trading platforms.
- An online trading account is typically linked to a Depository Participant and a bank account (one that your broker has a tie up with).
- Online trading is much more secure as the individual trader has complete control over transactions made.
What is online trading?
Online trading is a simpler digitized version of offline trading. It is simply buying and selling assets through a brokerage's internet based trading platforms. Online trading has opened other varied options, with stocks, bonds, mutual funds, ETFs, futures and currencies also being traded online now.
Brokerage firms make the trade for any trader or investor. An online trading account is typically linked to a Depository Participant and a bank account (one that your broker has a tie up with). One large benefit of online trading is the speed with which transactions are executed and settled. Since the entire process is digitized and there are no physical documents to be copied and filed, the entire process is a lot faster. Transactions take a matter of seconds now that prices can be searched and compared against multiple databases. Exchange with the best price is matched and a confirmation is sent to both ends i.e the buyer and the seller.
Differences between online and offline trading
Ease of Trade
Online trading is done individually and all transactions are made according to the will of the individual without reference or interference from any external source, as opposed to offline trading where the broker does all the transactions. Online trading is also more convenient in today's world as any device can be used to carry out trading. All you need is an internet connection and transactions can be carried out in a matter of seconds. Offline trading on the other hand required the individual to approach the broker's office and make detailed phone calls in order to intimate transactions. This also makes offline trading more expensive as the brokers charge a hefty amount to carry out these transactions.
Online or offline services should be selected based on the convenience of the individual. If you have access to a laptop/mobile, full time internet and are tech savvy enough to track the stock markets from anywhere, online trading is a good option.
However lack of an internet connection can prove to be troublesome if you want to indulge in online trading. Making phone calls to carry out transactions are then your best bet. Offline trading is also a good option for people who prefer personalized services and regular advice while contemplating any kind of transaction. Sometimes advice from a professional in the field is assuring. However, it depends greatly on the type of broker you are dealing with.
Online trading is much more secure as the individual trader has complete control over transactions made. In offline trading, on the other hand, brokers may carry out transactions on behalf of the client without the knowledge of the client. This may lead to a loss in the client's account.
Real time Information
To carry out trading efficiently, a trader needs full time access to real time information including updates on any crashes or booms in the stock market. A huge benefit of online trading is that all this real time information is displayed on an easily accessible platform.. Offline trading puts you one step behind in this aspect as the market keeps updating itself every second. The time taken to place a call and then hit trade increases the time taken to complete the transaction.
Which type of trading is better?
After going through an article which almost batters offline trading, one might think online trading is a better option by leaps and bounds. With the introduction to the internet, business has changed and the financial industry runs almost completely online. Everything is just a few clicks away, and with the whole set up on a single platform, online trading is a lot more promising. However, traditionally speaking, India is a country inundated with offline brokerage houses. The internet was not as widely used and there is always a comfort factor associated with contacting an experienced broker who can provide valuable tips.
The truth is that there is no correct answer to which trading is a better option for you. It is upto the individual to decide which option suits them the best.
- An offline account appeals to people who prefer the hands-on approach, comfort and the expertise of a broker.
- Some people perform better with the flexibility, speed and privacy of an offline account.
- Nowadays, there are multiple trading platforms and brokerage firms that combine the best of online and offline. Along with the freedom to make decisions with an online account, you also get the tips and advice you might have received with a broker.