First people were driving while talking on the phone (most of them not very well). Now they’re texting while “attempting” to drive. And soon people will be trying to place their trades while driving. That’s all we need!
Seriously though, online trading has made life and trading so much easier. Mobile trading should even be more convenient. The following article talks about how both online and mobile trading are getting more and more popular and why.
Online equity trading, which is catching up fast among investors is changing the way trading earlier used to take place.
While investors are experiencing new found freedom to trade at their own pace and from the comfort of their own computer or mobile phone, there are certain aspects that they don’t have access to now with broker-client relationship virtually taking a back seat. Mobile trading, another dimension to online trading, which is just a year old in India, is a perfect tool for the day traders. It is common to see people betting in Futures & Options (F&O) segment on mobile phones, though connectivity and price at the time of execution may be still an issue.
Satish Menon, director operations, Geojit BNP Paribas said, “Today’s generation is quite independent while booking tickets for travel, movie tickets or investing in stock markets. If somebody could duplicate the earlier broker-client relationship, it would be even better for online trading.”
Online trading is growing with the fast spreading reach of the internet facility in India. According to NSE data, net trading, which was kicked off in India in February 2000, commands a healthy 10 per cent plus share. In South Korea 80 to 85 per cent trade happens on internet, while in US 40 to 50 per cent trade is online. Subhash Sharma, senior vice president-operations at GEPL Capital said, “Nobody is now coming to a broker’s office for trading purpose. If at all, they visit to collect contract notes or confirm trades.”
HNIs though still call the broker and trade as their orders are large and price sensitive. Experts said smart and savvy HNI and retail investors are going for mobile trade to make some quick buck on the move. For institutions it is still a very-very careful and calibrated order placing with real time rates with their broker, though for them now also new options are emerging like having a broker terminal in their own office. But there are certain aspects where online trading is not as helpful as earlier broker-client relationship use to. An investor in online trading can trade with the limits of his cash holdings in the account where as earlier an investor would ask for extra exposure in a particular stock at an opportune time within the same cash limit, the broker would give him the extra limit to trade with a mutual understanding that the amount would be deposited later within a stipulated time.
“Faceless online trading may have led to the decline of leveraged trading due to the absence of a face to face broker-client relationship. While this may prevent magnified losses during a downturn it also means that investors’ ability to take bets is substantially reduced,” said dealer who has been in the business of for the last 16 years. However, the online trading system in a large broking firm may be a little less caring to their client on giving them necessary advisory on how to trade in a bull or a bear market.
In equity investing there is plenty of buy side advisory available in the market but there is lot that a new investor needs to know on how to book profits which is essence of equity investing. Earlier brokers would advise their clients to book profit when the share price moved up, off course the final decision lay with the beneficiary account holder.
In fact in equity investing timing is getting very important, no more people want to sit on a 10 per cent plus gain for long, rather they square it off. There is some hard truths also, in India retail participation in the equity market is falling, it’s becoming more of a day trading with falling participation from long term investors.
Raamdeo Agarwal, joint managing director, Motilal Oswal Financial Services blames omnipresence of analyst on television channels for a change in investors’ short-term views on the markets. Raamdeo, himself a matured investor, feels investors should take a call on companies from investment angle and look for handsome dividends while the price appreciation of the stock is a function of the dividend/profit made by the company.
A Mumbai based broker also feels the services at the back office of a large broking firm is slow when you go to open a demat account to trade in the market compared to a smaller broking firm where services are personalized and as against the faceless online trade here people would consider your request at opportune times in the market.
