Knowledge Centre

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 gains (STCG).

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.