An online demat account is the one that holds all your primary financial instruments, primarily equity stocks, bonds, futures, options, and ETFs, along with cash. It is an upgraded version of the traditional stockbrokers and offers several advantages, which has ensured that its customer base is expanding.
This article discusses four top benefits and cons of having an online stock broking account.
What is online trading?
Back in the day, investors would have to call their brokers to give them orders to execute their buy and sale orders. It was not only cumbersome, but the presence of manual communication also meant there was room for errors.
With the internet becoming a vital part of our lifestyle, it has resulted in the advent of modern online stock broking platforms. These allow you to use online platforms, such as a website or an app, to place your trades yourself and eliminate any middleman required for managing the process.
Pros of online stock broking
With online stock broking, as an investor, you can conduct trades at your convenience during market hours. You eliminate the middleman who would otherwise charge a commission merely to place the buy and sell orders.
It gives you control
You have all your details regarding your investment in front of you on a screen, and you can fiddle with them during the market hours. In addition, it enables you to trade on the go and take calls without having any middleman interfering.
Given that online stock broking eliminates mediators, it helps you save costs. In addition, most of these platforms charge minimal fees for executing your trades, ensuring that moving to them is a cost-efficient decision.
With online stock broking, you can access charts and figures that are great for performing technical analysis and real-time financial instrument monitoring. You can see gains/losses pertaining to each order you place in real-time, making the process a lot more user-friendly.
Issues with online stock broking
While online trading is fast and inexpensive, it has several limitations as well –
- The online platform is as good as the underlying servers and software. If there is a glitch, it can result in a sub-par user experience and investors losing out on potentially beneficial trades.
- These platforms often follow a lean cost structure which can result in poor customer service and people having to wait in long queues, especially during peak market hours.
- Your internet can often be finicky, and in such cases, you may have to enter or exit trades at unfavourable prices.
- Unlike traditional brokers, you do not have a personal manager managing your account. It can result in you having to make decisions on your own, and if you do not have the depth of knowledge, you can lose money in more trades than closing them in green.
An online stock broking platform gives you direct access to the stock market, but it is vital for you to know what you are doing before you place a flurry of trades. So make sure you have some experience before you decide to go all out via these platforms.