Understanding the nuances of online share trading.
By now the concept of internet trading is well understood. You execute an online
trades sitting in the comfort of your home or your office. Above all you get the
benefits of transparency and seamless execution. Here are 4 important things you
need to know about online share trading…
Online security is paramount:
When you trade online the most important thing is security. Here is how you can
ensure security while trading on the net. Firstly, always rely on 2-factor authentication.
That reduces the chance of your trading account being hacked. Secondly, never access
your trading places from cyber cafes or from public Wi-Fi systems. It is just not
safe. Thirdly, keep your passwords slightly complicated and keep changing passwords
at least once a month. Simple passwords like your date of birth and marriage anniversary
are best avoided. Never write down your password on a piece of paper or in your
computer text files. Lastly, ensure that your anti-malware and anti-virus on your
PC are updated and the latest version is downloaded. If you find that your system
is inordinately slow or too many windows are opening then just log out. It is a
signal that your PC has been compromised. Above all, when you are trading, never
leave your trading PC unattended even for a minute.
Make the best of the call to action that brokers provide:
Most brokers provide you with a call to action. That means when you read a research
report or screen a stock, you will be able to execute the transaction on the stock
with just 1 or 2 clicks from that point. This is an extremely efficient way of trading
and you can make the best of it. Also make the best of the research and ideation
provided by your broker. They can help you enhance your trading experience online.
Make full use of the analytics provided by your broker:
Today an online trading account is not just a platform for execution. It is also
a platform for you to review your portfolio and use other forms of analytics to
get a measure of your portfolio performance. Use analytics like the portfolio tracker
which enables you to see all your holdings in one place. In most cases, this portfolio
is automatically populated from your trading account. Your portfolio also provides
your other analytics like sectoral mix, thematic mix, your portfolio performance,
your tax status etc. Check that your mix of sectors is not getting skewed in any
direction. Also check that your portfolio performance is not lagging the index.
It defeats the purpose of equities. Also use the tax section to calculate how much
advance tax needs to be paid each quarter based on your projected short term capital
Keep an offline audit trail of your online trading account:
It is always advisable to maintain an offline trail of your online account. Key
documents like your contract notes, your quarterly trading statements, your ledger
and your demat statements are all available online. For ready reference, try to
download a copy at least once in a quarter. You can either store these files in
an external pen drive or even in your cloud storage. Alternatively you can even
take a print of key documents for your reference. Your online trading account places
a lot of power in your hands. It is up to you to make the full use of the same and
enhance your trading experience.