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IN 9212571984 CHAPTER 1

INTRODUCTION TO ONLINE TRADING

Online trading has become the standard method for buying and selling stocks for many people, especially those who have only gotten into the market since the rise of the Internet. The ease and rapidity of online trading allow investors to make decisions regarding stock trading in a manner that forgoes the careful calculation and deliberate analysis of data that had been the standard trading methodology

Online Brokers

Online trading is not the same thing as trading without a broker. Registering with an online broker is, therefore, the first step in getting involved in trading stocks from the comfort of your living room or office. The most popular online brokers include E-Trade, Ameritrade and Charles Schwab, but there are many others from which to choose. The use of a online broker is necessary for the proper management of the both the money and the stock in your account.

Minimum Requirements

Most online brokerages require that investors keep a minimum investment before they can begin trading on the stock market. The minimum amount required to open an account will vary from broker to broker. Once this amount has been deposited and you have conducted your first online trade, many brokerages will then insist upon your keeping a minimum balance in the account, although it is possible to find some online brokers that do not have this minimum requirement.

Trading Fees

Online traders use their accounts for a variety of different trading methodologies. "Daytrader" is the name given to those who will be trading stocks on perhaps a daily basis. Others, however, may just buy one or two stocks and hold on to them for a long period of time. Online brokers should be checked for fees related to making numerous trades, as well as fees related to account inactivity. Depending on the type of trader you foresee yourself becoming, determine what kinds of fees the broker enacts.

Expert Advice

One fee that may be avoidable is an extra charge for getting expert advice. Some online brokers do not even offer expert insight, and are usually the most inexpensive to deal with. On the other hand, you may be saving money in fees but losing money by investing in unwise stock choices. It may be worth the extra fees to get statistical analysis of the kind you cannot get on your own.

Other Services

Some brokers allow you to do many more things than simply buying and selling stocks. The bigger and better-known online trading sites are actually more like banks, offering such services as mortgage loans, credit and debit cards, money market funds and even the potential for investing in bonds and futures trading.

Benefits

The biggest benefit of online trading over traditional stock trading is that it can be done with real-time knowledge of prices. Most people are familiar with those old-time stock tickers that produced ticker tape; the stock prices those tickers produced were usually around 15 minutes old. Today's online trading can be done almost instantaneously, using stock prices that are as up-to-date as possible.

Warning

Online trading is not without its pitfalls. Among the dangers online traders should be aware of are such scams as fraudulent IPOs that trade on investors' desire to get in on the ground floor of a potentially hugely successful company. The most common pitfall of online trading takes advantage of the very medium itself. A scam known as "pump and dump" is run by talking up certain stocks on Internet message boards and in chat rooms that serve to run up the price of a stock. Once the scammers dump the stock for a profit and quite pumping it up, the price falls again, and regular investors lose money.

HISTRORY OF ONLINE TRADING The birth of online trading came with the debut of the Internet. Prior to this, everyone who traded placed their order through a broker who greatly influenced their purchase decisions. As a matter of fact, only large businesses had access to the web before 1979. Today, however, daily investments are made by individuals through the Internet as online trading continues to remain one of society's most popular ventures

History

Online trading began in the 1900s with the advent of the Internet. Where traders once had to physically call in their transactions, online trading opened a new window of opportunity. Traders were able to place their transactions independent of an external broker. Online brokerage firms became the new way to conduct business. CompuServe came on the scene in 1969 as the first major online service company. By the mid-1980s, it was considered a giant in its field.

Time Frame

By the end of the 1900s other brokerage firms began to establish themselves. First Omaha Securities, Inc. was one of the first. This company went through a period of transformation and eventually became TD Ameritrade in 2005. Another company, TradePlus, made its first

stock trade in 1983. It offered the public the opportunity to conduct business with America Online as well as CompuServe. Business grew rapidly and nine years later, TradePlus became a reputable firm. Today, TradePlus (now known as the E-Trade Group) remains a leader in the industry.

Types of Brokers

There are several types of online brokers and it is pertinent to choose a reputable company. Some things to consider when choosing an online broker include the minimum investment needed to begin trading; amount of inactivity fees; trading support; commissions and whether the broker is involved in other businesses. Carefully weigh the answers to these questions before settling on an online broker. As this broker has access to your financial information, you need to make sure that they have a secure system in place. Some well-known brokers are Fidelity, TDAmeritrade, E*Trade and Scottrade.

Considerations

By the 1900s online investing had exploded. Internet access became affordable, making the use of the Internet widespread. The idea of being self-sustained as a trader was appealing. There was no need to get a broker involved and business could be conducted around the clock. By January of 1996, the first e-broker was developed and hundreds opened accounts online brokers. If an individual was able to conduct appropriate preparatory research and had reasonable management skills, he was able to succeed online.

Trading Today

Online trading has developed tremendously since its inception in 1994. Today practically anyone with the means can invest with a reputable company, such as Forex. The Forex company became a new major contender to the control of the trading market. The modern

online Forex company offers new investment options for online traders, such as the ability to use margin account as a leverage to investments. This means a trader can purchase a large sum of foreign currency with paying the full price. Margin trading allows for greater buying power and larger profits.

OBJECTIVES

To study the conceptual framework of online trading and de-materlisation. To study about online trading procedure followed in ITI Financial Services Limited. To study the advantages of online trading system over manual system. To study how online trading system helps in improving market transperancy .

To study how online trading system helps in smooth market operaton while retainingthe flexibility of conventional trading practices. To compare the transaction changes of similar firms. To study the entire mechanismof trading online and dematerialization. To study various benefits of depositories. To study the concept of dematerialization of shares that is procedure, Demat a/c, transfer of securities and trading and settlement of Demat securities. To study the services provided by NSDL and CSDL. To study the procedure of online trading of Demat securities.

IMPOTANCE

Stock exchange is an integral part of capital market it is the most perfecttype market for securities wether govt or semi govt bodies or other public bodies also for shares and debentures issued by joint stock enterprises.Stock exchange provides liquidity to the listed company they give quotationst o l i s t e d c o m p a n i e s a n d h e l p i n t r a d i n g a n d r a i s i n g f u n d s f r o m t h e m a r k e t . S t o c k exchange provides ready marketability and unequalled of ownership of stocks, shares andsecurities.Stock market in India is more than a centuary old and has been functioningeffectively through the medium of recognized stock exchange the stock market which isan integral part of the capital market has been major impact on the functioning of theeconomy. In turn, the agriculture industries growth and performance of corporate sector in particular , reflecting the fundamentals in the economy would be influenced the tone of capital and stock markets, and since the capital market is playing major role in Indian economy from the past several years. There is need to study the capital market in India.T h e p r e s e n t s c e n a r i o t o c o m p l e t e a n d s u r v i v e t h e r e g i o n a l s t o c k e x c h a n g e would require sound infrastructure and trading system as per international standards,due to the following reasons.With the introduction of online trading liquidity will improve considerablywhich is very much essential for attracting small companies to the exchange. Before theintroduction of the online trading, Outcry prevalent. Here the member or the broker Would stand at specifies spot in trading hall. He is required to shut out thename of the company, number of shares he has and the price of the shares ultimately thedeal would be made between the buyer and seller and transfer of the shares take place. With the use of the online trading surveillance be came easy as there is very less scope for speculation. The invester is provided with best offer. Also transparency is observed in transactions

Function
Being a member of an online trading site allows log in and trading using any computer that is connected to the Internet. The sites are operated and managed by a brokerage firm, who is responsible to be certain that all trading regulations are followed. The site provides streaming real time information along with listings of stocks, bonds, options, commodities and other investment instruments. The site also offers a ledger or personal record of the status of the investors account and holdings. Research tools are also made available

Purpose

Different types of orders suit different situations and investor objectives. For example, an investor looking to rapidly buy into or sell out of the market would probably use a market order, since this instructs his broker to fill his order immediately, at the next available price. In situations where an investor is willing to sacrifice speed for an optimal price, he'd use a limit order.

Market Orders

Market orders allow traders to enter or exit the market immediately, at the current market price. These orders are used when speed is more important than getting a precise price. They are best used on big-name, high-volume stocks, where there's a good chance an investor can get an order filled very close to the last quoted price. Market orders are not ideal for trading obscure, low-volume stocks because of the risk that the order itself will produce a large price movement, resulting in the trader getting her order filled far above or below the real market price.

Limit Orders

A limit order is a buy or sell order that is limited to the price set by the investor. For example, if an investor likes a stock at $29 but thinks it might be coming down to $27, he could place a limit order at $27 and would only get his order filled if the stock hits that price.

Stop Loss

A stop loss order is used to limit risk on trades. Typically, stop losses are set at a percentage level of loss that an investor would find acceptable if the trade doesn't work out. For example, an investor might thinks a company's stock looks appealing at $50 a share, but in case his decision is wrong, he sets a ten percent stop loss at $45. If the stock price falls to $45, his position will automatically be sold out, eliminating the risk for any greater loss.

Day Orders vs. Good 'til Cancelled Orders

Day orders or Good 'til Cancelled Orders are modifications to standard market or limit orders. A day order means a buy or sell order for a specific price is only good for the trading day, and if it is not filled at the end of that trading day it will be cancelled. A Good 'til Cancelled (GTC) order, meanwhile, is open much longer. Depending on the broker, a GTC order can be

open for anywhere from 90 to 180 days in the event the stock's price does not touch the order price.

ROLE When it comes to online trading platform but those do not have any proper knowledge of financial market conditions find it very difficult making good investments and they end up cursing the financial market. If a person remains updated about the latest financial news then he can collect enough information easily and get an idea about the asset on which he or she should invest. This article will assist you in understanding the role of financial news in making profitable financial decisions especially in the field of binary option trading. The main reason why a trader ends up with a bad market record is poor market knowledge that results in bad prediction. In order to make good money in the financial market a trader has to be right at least 70 percent of the total times. The market tips and professional advice may seem helpful for a short period but for those who prefer to play on a long term, they have to keep a close watch on the financial market news. Financial news related to the market include important news like stock movements and price movements that decide the quality and returns of the investment you just made on the underlying assets. Financial research also includes important concepts like market research analysis. Market analysis includes the analyzing of market data over a particular point of time so that the position of assets can be estimated. These estimated figures assist a trader in making successful investments and get a clear view of the financial market. It is because of the absence of middlemen online trading platform is much popular among the traders and it is the absence of middlemen that makes trading even more difficult because there is no one who can give you positive feedbacks. For a trader to start online trading, he or she has to open an online trading account with a broker after making the agreement. A good broker after registration offers good amount of research materials to the traders so that a trader can make good choices on selecting an underlying asset. It would be best to conclude that a financial market is never the same and it keeps changing from time to time so a trader should stay updated about the latest market conditions. Risk is unavoidable part in business enterprises but it can be minimized with proper financial news. Now there are many brokers that offer latest financial news to their clients on a daily basis. Menu :

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