Online Trading Companies – How to Choose Wisely

Online trading companies have made it easy for individuals from all over the world to buy, sell and trade stocks and to gain a profit in shares. There are a number of things to be kept in mind before deciding on a trading company. These include, but are not limited to:

– tools provided to you to aid in your trading endeavors

– fees and commissions charged by the company

– quality of customer service and

– the security of the company’s website

Tools Provided

Potential customers of online trading companies should consider the resources provided to them to facilitate their trades. Online companies should offer investors tools to help facilitate effortless trading. These tools include stock alerts, quotes, trading charts and graphs and search reports. Making these tools available to an investor instantly increases the investors abilities to trade with ease.

Fees and Commissions

One of the most important factors to consider when browsing online trading companies is the fees and commissions that the company charges their customers. Depending on the amount of fees and commissions charged by companies, an investor’s ability to make a profit could be compromised.

Security

Security is of the utmost concern when dealing with online trading companies. With every stock bought, sold or traded, money is being exchanged. If the company does not have sufficient security in place, it could truly jeopardize not only the identity of the investor, but any and all trades that the investor makes on the company’s website.

The company that you choose to go with for online trading should have multiple levels of security in place, which includes secret questions, code recognition and secure passwords. With these methods in place, investors can rest assured that their information will remain safe from hackers and other individuals with malicious motives.

Customer Service

As with any business, customer service is extremely important when considering an online trading company. Especially when dealing with finances, the trading company you choose to use should have customer service agents that are readily available- whether on the telephone, through email or through the company’s website itself via a chat option. These agents should be knowledgeable on the company’s systems and the products offered in order to properly assist you, the investor, with your needs. Of course, customer service should always be free and have reasonable hours of availability. One great resource for determining the reliability of a company’s customer service is to do your research online. Reading customer reviews is a great way to way to determine if the customer service of the company is up to your standards.

Other factors to consider include mobility. Many online trading companies are now offering customers the option to continue to monitor their stocks- even when they are on the go! If this is important to you, researching whether or not the trading company you are considering offers a mobile application for your mobile device is a good idea.

Choosing an online trading company is not something that should be done lightly. Taking the time to do your research on all of the companies you may be considering allows you to make an informed decision on the right company to suit your investment needs.

BSE (Bombay Stock Exchange) – Online Trading System

Gone are the days when you needed a broker to help you buy and sell stocks, shares and make stock market investments. Through online investment you can buy and sell shares with just a few clicks of the mouse. The economic and capital market in India cannot exist without a stock exchange; there are two main stock exchanges where transactions take place; the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). While all the major transactions take place here, there are over 20 different stock exchanges located across the country.

Online trading in India has changed the meaning of trading in the country. With no requirement for a broker, trading has become easier, faster and far more convenient than earlier days. Some of the major financial products and services offered through online trading are mutual funds, equities, general insurance, life insurance, share trading, portfolio management, commodities trading and financial planning. In online trading, the investor has to pay less brokerage as compare to offline trading. There is no need for any paperwork through online investing and the need for a middle man is eliminated. All the stock accounts are stored in a Demat account where they can be viewed.

BSE online trading was established in 1995 and is the first exchange to be set up in Asia. It has the largest number of listed companies in the world and currently has 4937 companies listed on the Exchange with over 7,700 traded instruments.

The only thing that an investor requires for online trading through BSE is an online trading account. The trading can then be done within the trading hours from any location in the world. In fact, BSE has replaced the open cry system with automated trading. Open cry system is a common method of communication between the investors at a stock exchange where they shout and use hand gestures to communicate and transfer information about buy and sell orders. It usually takes place on the ‘pit’ area of the trading floor and involves a lot of face to face interaction. However, with the use of electronic trading systems trading is easier, faster and cheaper; and is less prone to manipulation by market makers and brokers/dealers.

The BSE provides an efficient and transparent market for trading in debt instruments, equity and derivatives. This is performed through a system known as BOLT – BSE’s Online Trading System.

In the stock exchange, a key index is used to keep track of the important or the most traded stocks in the exchange. The indice used at the BSE while trading is the SENSEX and is displayed in all major portals, newspapers and magazines. It is India’s first stock market index that enjoys an iconic stature and is tracked worldwide. It is conducted on a free-float methodology and is sensitive to market sentiments and realities.

There are also indices such as BSE small cap, BSE mid cap and BSE500 to take care of medium and small companies. Furthermore, India index services and Products Limited has indices such as CNX Nifty Junior, S&P CNX Nifty, CNX 100, S&P CNX 500 and CNX Mid cap. The BSE offers 22 indices to suit a multiplicity of needs, inclusive of 12 sectorial indices. For example, the BSE PSU Index tracks the performance of the listed PSY companies and also helps the Central Government to monitor its wealth on the bourses.

The BSE has become a completely ‘corporatised and demutualized stock exchange’ through the use of online exchanges. With partners such as Deutsche Borse (DB) and Singapore Stock Exchange (SGX) it has a global competitive force. BSE has strategic relationships in almost every part of the world- Europe (DB)), Hong Kong (ETF) and Asia (SGX), prominent public sector undertakings such as State Bank of India, Bank of India, Life Insurance Corporation of India and Central Bank of India.

Benefits of BSE trading system in India for share brokers or newbies

There are a number of attractive services to empower investors and facilitate smooth transactions. Some of these include:

1) Investor Services: A range of services are offered to investors. Being the first exchange in the country to provide an amount of INR 1 million towards the investor protection fund, the BSE had launched a nationwide investor awareness program; ‘Safe Investing in the Stock Market’ under which there were 264 programmes which were conducted in over 359 cities in India.

2) BSE has an Online trading BOLT system: the online-Trading system (BOLT) facilitates on-line screen based trading in securities. Currently it operates 25,000 Trader Workstations which are located across 359 cities in the country.

3) The BSE has the world’s first centralized exchange-based Internet trading system – BSEWEBX.com. This system helps the investors anywhere in the world to trade on the BSE platform.

4) The BSE has an online Surveillance system (BOSS) which monitors on a REAL-TIME basis the price movements, the volume positions and members’ positions as well as real time measurement of default risk, generation of cross market alerts and market reconstruction.

5) The BSE has a training institute – known as the Bombay Stock Exchange Training Institute (popularly known as the acronym BTI).The BTI imparts capital market training and certification; in collaboration with a number of reputed management institutes and universities. There are over 40 courses to choose from on different aspects of the capital market and the financial Bombay Stock Exchange market.

Popular Online Trading Styles

There are many methods and styles used by online traders to trade. The categorization of these online trading styles can be done using many criteria such as the trading products, trading interval between buying and selling, methods/strategies used for trading, etc.

Based on the product traded, online trading styles include stock trading, options trading, futures trading, commodity trading, forex trading etc. Stock traders trade equities or shares from companies. Option traders trade options, which enable one to buy or sell a right at specific time periods under specific market conditions. Online futures traders and online commodity traders trade contracts; contracts for products like crude oil and natural gas or contracts for treasury notes and bonds. Online forex traders trade currency pairs, they buy one currency and sell another one according to exchange rate changes.

According to the interval between buying and selling of products online traders can be broadly classified in to short-term traders and long-term investors. Usually traders with trading interval less than one year are known as short-term trader and those with trading interval more than one year are known as long-term investors. Short-term investors, forms the majority of active traders, trade products according to short-term trends. They trade products usually according to its merits. Long-term investors trade with long-term goals; they are usually company/industry specialists want to invest in growing fields.

Short-term trading can be further classified in to day trading, swing trading and position trading. Online day trading is the most active type of trading. Day traders’ trading interval does not exceeds one day. They buy and sell products with in seconds, minutes or hours for usually small gains. Day trading eliminates overnight risks. Day trading involves scalpers – those buy and sell large amount of shares/contracts with in seconds or minutes for very small per share gain, and momentum traders – trades according to the trend pattern of specific shares/contracts with in a day.

The buying and selling interval of online swing traders range from few hours to 4 or 5 days. They, like day traders, trade shares/contracts according to slight fluctuations in price, but they are willing to hold their position until the next day. Online swing trading involves overnight risks but have gain percentage higher than that of day trading. Online position traders trade equities/contracts with an interval of days to months. They relay on long-term trends and company performances. They have higher gain percentage and higher risks than online swing traders.

According to the strategies followed online trading can be classified in to Brother-in-law style -traders seek advice from brokers or other traders, Technical trading style- traders use advanced systems to find out trading trends, Economist trading style – traders relay upon economic predictions, Scuttlebutt trading style – trading according to information extracted from brokers or other sources, Value trading style – trading according to merits of individual stocks not to whole market, and Conscious trading style – combination of two or more of above styles to finding right opportunity.