Digitization has created better and more efficient financial markets where humans and machines are working together on the trading desks. Stock markets have moved to online platforms. Online trading refers to conducting transactions for investments over the internet using a stockbroker’s trading platform. The online trading system is based on dematerialised securities. One can invest only in dematerialised securities in the stock market. With the adoption of a Demat account and an online trading system, the stock market has seen accelerated growth in more participation of investors and expects a further growth.
Digitized Trading Platform
With the introduction of the Screen-based Trading System (SBTS), the stock market got digitised and evolved with new technologies. Now, investing and trading decisions leverage data analysis rather than human intuition. The future of stock trading will be a true merger of the best of both humans and technology, where trade execution will become more efficient.
Let us elaborate on how a stock trade takes place.
Online Trade Execution System
- Whenever a buyer or a seller places a trade order using a trading account, the broker forwards it to the relevant stock exchange immediately.
- Then the stock exchange looks for the seller/buyer with the same securities and matches the order. These buyers/sellers want to deal in the same security at the same price in the same quantity.
- Once the buyer and seller requirement matches, the exchange executes the order, and the clearing corporations settle the transactions in the buyer and seller demat and bank accounts.
- With the successful trade settlement, the buyer’s demat account gets credited with the securities, and the seller’s demat account gets debited.
Tech-enabled Trading Solutions Fostering Retail Participation
Before online trading platforms, stock trading was accessible to just a few. The stock markets have undergone a paradigm shift with the adoption of the digitized trading system. Over the past few years, the accessibility to online trading platforms has increased. More than 29 lakh new Demat accounts are being created with brokers every month in FY22.
Online trading platforms are a one-stop terminus to invest in multiple assets. With the launch of app-based trading under digitization, brokers are able to serve more investors. From opening demat account along with trading accounts and placing trade orders to maintaining portfolios, online trading platforms have made trading convenient for investors.
You can invest and diversify your investment portfolio with stocks, bonds, ETFs, commodity futures and options, currencies, and many other financial assets on these trading platforms.
Future of Online Stock Trading
New technologies, like Artificial Intelligence (AI) and Machine Learning (ML), have significantly improved user experience. Web and mobile-based applications and trading platforms facilitate retail investors in research to pick the right stocks and make informed investment decisions. They can trade the right stocks at an optimal price. It will not be wrong to say that today’s advanced trading platforms enable investors in the wealth creation journey over the period.
Discount Broking Space
Traders prefer discount broking space for low brokerage trading services. Millennials are tech-savvy and look for trading platforms with advanced features. Today’s web-based and app-based trading platforms with discount brokers can meet their trading requirements at a low cost.
They follow a 100% digital process to open a demat and trading account, facilitating the tech-savvy population in India. Experienced traders can open their margin trading accounts and utilize the margin trading funding (MTF) facility at comparatively low-interest rates in the industry. They offer different trading plans for different types of investors and traders. You need not pay a high brokerage for high-value trade. Their trading plans offer online trading at a flat brokerage rate irrespective of trade volume in all segments.
Thus, the stock market allows you to grab numerous opportunities via online trading platforms. Stay invested at a reduced cost.