Offline vs Online Trading….

Online trading is quite popular lately as its more affordable, fast and its everything one would want when on a move..

Especially for all the working professionals, for all the investors who travel a lot.. trading from almost anywhere, transferring funds for trading from anywhere is an ease.

Now even trading via mobile platforms have come up which is again anything a professional would want when on a move or in a meeting etc.

Ofcourse it has its own advantages and disadvantages when compared to Offline trading.

Basics of Online trading:

-Trade from almost anywhere.

-Transfer funds online from anywhere.

-Shares are transferred to and fro online. (as compulsory one has to open a demat account with the same broker he wants to trade online with)

-Can trade only to the extent of credit in the trading account.

-Absolutely Real time stock quotes.

-Real time confirmation of trades.

-View trades, accounts, balances, portfolio etc online.

-Less brokerage/commission costs

Basics of Offline trading:

-Call or visit the broking firm and trade.

-Transfer funds online as well as via cheque

-Shares can be transferred online if account is with same broker else can deliver   manually too.

-Trading limits can be flexible depending on the relationship with the broker.

-Can’t view real time quotes, would have to depend on the dealer.

-Tele-confirmation of trades.

-Contract notes can be viewed online as well as can be received offline via courier

-Accounts, balances, portfolio etc can be viewed online as well as on request can be received via courier.

-Higher brokerage/commission costs.

Indians are still quite conservative when it comes to using internet and trading via that. Especially the old generation they would still prefer to call up and place a trade with a broker then trade by themselves online.

Trading online is much secured now, right from banking to trading to depository accounts all are completely secured, safe and ready to handle heaps of transactions at any point of time. While trading online one can trade up to a x limit decided by the broker compared to the credit one has. For eg Client A has `500 credit with the broker and the broker generally gives out trading limit to say 5 times the credit. So for client A his limit would be 5x `500 i.e. `2500. The client would then have to pay up the difference in a stipulated time else the broker would sell off his buying to cover the difference at whatever the price the stock is trading in the exchange.

The same way the rules are bit different for clients trading offline. Depending on the relationship one has with the broker / dealer the client can get a huge trading limit. Also the client can take leverage in paying up the difference and if the relationship is very good, the stocks in his account won’t even be sold off to cover the difference.

A broker incurs less cost in online platform then in offline. In online the broker just has a cost of a call center which helps clients to trade via calls incase of some emergency.  Whereas in offline the broker has to incur a lot of costs like: dealers, phone calls and much more.

Major advantage one has is offline trading is the help and stock tips / guide received by the dealer. Whereas in online though they get stock tips, but end of it the client is on his own. Incase of any major ups and downs, the dealer would call and give some personal attention to the offline client which is not possible for an online client

If one wants someone to personally monitor their portfolio, then the only option is offline trading…These are just a few mentioned differences, the list can go on..

Would share the basic rules while investing in my next post..

“ I never attempt to make money on the Stock Market. I buy on the assumption that they could close the market the next day the next day not reopen it for five years.” -Warren Buffet.