How investment in online trading strengthen personal finance

The easy availability of smartphones, global access to the internet and an increasing demand for customization of trading platforms from end users has amplified the demand for e-trading.

Today, due to its quick and easy process, online trading of securities including stocks, bonds, mutual funds, ETFs, and futures has become a norm. The global online trading platform which was valued at $8.9 million in 2021, is therefore now poised to reach $18.4 Billion by 2031, growing at a CAGR of 7.8 percent from 2022- 2031.

However, despite its roaring popularity and presence in the news, investing via online trading platforms always seemed rather formidable activity until the recent past. The risk associated with the idea of investing online previously deterred people from diversifying their portfolio beyond fixed deposits, gold and mutual funds for long.

But this situation got reconditioned during the pandemic when ample time led people to unconsciously accelerate the rate of investing in online trading platforms. It powered a revolution by giving rise to a new generation of eager stock investors, the youngsters and millennials, who believe in making direct investments as opposed to relying on mutual funds or life insurance. The rates on fixed deposits don't entice them.

Not just traders but investors of all types can benefit from e-trading’s prompt access and time analyzing information on various trading devices for their financial assets. Usually provided by internet-based brokers, the online trading platforms can be used to execute an easy buy or sell order within seconds as well as market restrictions, set a stop-loss, and check the status of a transaction.

Today, even retail investors are influencing financial markets in a way that was not thought previously. They currently account for 45 percent of stock exchange trading volume in India, dominating the country's markets. Besides convenience, e-trading also offers differential pricing which has significantly lowered the costs compared to the commission charged by traditional full-service brokers.

As per NSE and BSE maximum commission charges are up to 2.5 percent and it can go as low as 0. This implies a lower investment and higher gain. Elimination of offline trading and allowing independent trade, sans interference, not only reduces the overall trading costs but also makes trading hassle-free and much more lucrative. It allows investors easy, cost-effective access to global financial markets and can potentially result in profits in multiple currencies.

Further, as interest rates are expected to rise from 4.9 percent in June to 5.9 percent in September 2022, online trading could provide great and easy opportunities for brokers to profit from traders, who are becoming increasingly wary of inflation. As for traders, stock markets are always a great source of outpacing inflation and increasing wealth.

By being more aware of the financial markets, you can avoid the misuse of funds by a third party. By knowing how market limits, stop-loss, and take-profit orders work and when to use them, investors can get the best execution and manage risk. There are ample free and paid courses that are available nowadays to help traders make informed decisions.

Over time, this knowledge can help you in gaining complete control of your investments, better understanding of the market and better understanding to tell good investment opportunities from bad ones. Ultimately, leading to less loss and better financial benefits.

In online trading, along with buying low and selling high savvy investors can strategically deploy their money in order to allow it to work in more than one way—you can multi-task your money. Once you understand how online trading works, it can be a financially rewarding and exciting experience.

Although the uncertain side of investing in the market, volatility being the major cause, can be a bit thrilling to watch, it is most appropriate for investors as they can see the numbers adding up fast from the comfort of their homes. All they need is a good internet connection, Demat & trading account, and the willingness to dive into the market.