As the “online” word suggests, you would have assumed that your online presence is required for trading stocks online.
You got it right.
To trade without the need to call up your broker, you need to use an internet trading facility.
Here’s the steps you would need to start trading stocks online
- Firstly, Choosing a Broker or Online Trading Company
- Secondly, Opening a Trading Account through the broker.
- Third, Get a good understanding of how to use Trading Platform & Chart Softwares
- Finally, start trading.
Note: Paper trading is advised initially. Once you get confident, you can start live trading with a small budget.
Top brokers you can choose for trading stocks online
In India, you could choose from popular online brokers like
In US, few popular top online brokers are
- Fidelity Investments
- TD Ameritrade
- Interactive Brokers
- Charles Schwab
How to choose an online trading company trading stocks online?
Choosing an online brokerage firm could depend on the below factors.
1. Your need for services
Do you need advisory services along with trading account?
For few traders, this could be one of the most important criteria to choose an online broker.Some of the least expensive brokers don’t offer much in the way of research or broker-assisted trades.
On the other hand, Full service brokers provide you a good number of services like advisory and discretionary dealing.
In addition, they could offer daily/weekly/monthly market analysis, speed news, technical or fundamental insights of a company etc..
Few brokers, called Discount Brokers, only trade on behalf of their clients and do not provide any other services.
Therefore, discount brokers charge you lower commissions than full service brokers.
2. Your trading style
Are you going to buy one stock and hold on to it?
If so, you’ll need to make sure the brokerage doesn’t charge a fee for account inactivity.
On the other hand, if you’re going to make lots of trades, you’ll want a lower fee per trade.
3. Hidden Costs
Beyond the commissions, brokers could charge a number of hidden costs.
These could include annual maintenance fees, asset transfer fees, account closing fees, inactive account fees, etc.
You need to be fully aware of all these charges beforehand.
4. Minimum deposit
Different brokers could have different minimum account opening balances.
Some discount brokers also give free trades once your account has crossed a minimum threshold.
5. Services offered
Most brokers provide a variety of trading instruments such as Stocks, Mutual funds, Futures and Options, Currency, Commodity.
However, you should ask for exactly what all products can be traded through your account.
6. Customer service
You must collect some customer service reviews of the brokers you are evaluating.
Evaluate the website user experience and the availability of real-time, over the phone customer service.
To trade stocks online regularly with a broker, you could visit the broker’s site a number of times.
Some sites do not work during login or while placing orders or server drops due to overload.
8. Research activities
Most brokers conduct research activities for their clients.
It is important that your broker conducts regular analysis and research activities.
Basis these, Brokers will advise you on your portfolio, market directions, new strategies and other reports.
9. Tools & Trading platform
To trade stocks online, your broker must use software which is comfortable to use, quick and easy to handle.
This platform acts as the hub, allowing investors to purchase and sell such securities as fixed income, equities/stock, options, and mutual funds.
While evaluating trading platform, you could look for trading platform which has an integrated charting software for free.
Popular charting software – TradingView.com is integrated with Zerodha for FREE.
This is a big plus for Zerodha traders like me and I really love this 🙂
10. Plans and Schemes
A good online broker often has different plans and schemes for their customers. Such schemes could be attractive as you’ll then pay a lower brokerage fee.
11. Training Materials
The broker could also provide you with free training materials for trading like Technical Analysis classrooms, Fundamental Analysis basics & more.
This could be a very important incentive for the traders & investors.
12. Other factors
Lastly, it is important to ensure that the broker is registered with a regulatory authority and is registered with exchanges.
Benefits of trading stocks online
- During the trading hours, it is very easy to enter/ exit your trades or monitor your trades while on move or on vacation.
- Placing any orders online happens within seconds. On the contrary, calling up your brokers may result in unnecessary delays.
- Your online trading account provides you with Trading Platform & tools to access tons of information / market news / stock recommendations / charts. All of these could be very useful for your trading.
- By trading stocks online, Planning and making your trading strategies could happen with much ease & effectiveness.
- Transfer of money to and from your trading account and your linked bank account happens very quickly & smoothly with online trading platform.