The advent and proliferation of the Internet have redefined our everyday activities, including share trading. Gone are the days when people would trade with the help of brokers. With demat accounts, people now prefer trading online, but is it really the best option?
Read on to find out.
Online vs offline trading
Let’s take a look at the pros and cons of each basis the following parameters:
Convenience – Unlike offline trading, a demat account gives you the freedom to transact anytime and from anywhere. See an opportune trading window between meetings or want to sell some shares while you’re on vacation? Just log in to your demat account and trade on the go without having to call or meet your broker first.
Automated v/s manual process – Trading through brokers involve multiple steps, such as conveying your preference, seeking information
, transferring the fund, and trading. Most demat accounts give you a one-stop solution for research and trading. Some
demat accounts, like Kotak Securities’ three-in-one account, combine trading, demat, and bank account in one, thereby automating the
process as you don’t have to manually transfer funds.
Control – Since you call the shots in online trading, it gives you greater control and flexibility to invest your money the way you would
like to. This reduces the dependency on the broker and gives you complete ownership of your money and investment.
Tracking and Analysis – Online trading also provides you the opportunity to learn with the flow. Tracking your investments and trading
choices and analysing how your decisions affect your investments are great learning experiences. When you do it yourself, you gain
greater knowledge and get better equipped to trade judiciously with time.
Chances of fraud – A broker, no matter how sincere and ethical, does bring with himself a chance of defaulting. There have been
instances of unethical behavior in the industry where brokers have traded without the knowledge or consent of the investor.
Since online trading puts you in the driver’s seat, it also eliminates the chances of any potential malpractice that offline trading may entail.
Guidanceand expertise – Online trading is a great opportunity to learn through trial and error and take calculated decisions based on
the plethora of research and information material available. However, it still pales in comparison to the guidance, expertise, and
experience that a broker brings. Some brokers have decades of experience behind them, which gives them an uncanny sense of
taking profitable trading decisions. However, if one has the patience and diligence to learn the tricks of the trade, they can easily acquire
such insight-based expertise within a couple of years.
The above comparison establishes that online trading often scores over offline trading, and anyone considering share trading as an
important investment avenue must have a demat account in place.
However, if you’re wondering about how to open a demat account, the procedure is extremely simple and quick.
Just choose a depository participant, fill out the online form, submit the necessary documents, complete the in-person verification,
and start trading.