Initially, trading was confined to the wealthy segment of society as only they had access to brokerage houses, business news, stock knowledge, etc. However, the decentralisation of stock knowledge through social media, the digitalisation of trading platforms, and the availability of demat accounts at minimum demat account charges have expanded the reach of the stock market.
The convenience of e-trading has eliminated the geographical barrier and reduced the time and energy involved in trading. SEBI (Security Exchange Board of India) reported an average of 1.2 million new demat accounts were opened per month in 2021 compared to 0.42 million in 2020.
Online and offline are two modes to invest in the stock market. Let us learn in detail about online and offline trading and why investors prefer online trading over offline mode.
Difference between Online and Offline Trading
In offline trading, the trader physically instructs the broker to place a deal. The trader can speak with the broker via phone or go to their office. The broker will verify account information and execute a trade on the trader’s behalf. Offline trading is almost obsolete as it is time-consuming and costly.
On the other hand, online trading is a form of online investing that involves purchasing and reselling financial goods and services over a network of electronic communications. The stock broker and investor concurrently are involved in the channel in real-time. By opening a demat account online with a stockbroker, traders can easily buy and sell multiple shares in minutes.
To grasp the differences between online and offline trading more conveniently, the present table discusses the difference based on major parameters:
| Parameters | Online Trading | Offline Trading |
| Ease in Transaction | Traders can perform multiple trades without a broker. | The trader has to depend on the broker for every trade. |
| Trading Fee | Online trading requires minimum brokerage charges. | Offline trading has high brokerage charges with additional travel costs. |
| Time Consumption | Trades are done within minutes. | The whole process of trading stocks requires hours to complete. |
| Access to Expert advice | To choose stocks and securities wisely, you can get in-depth reports with patterns, trends, and price movements. | Implicit faith in the broker is necessary. Traders must adhere to the broker’s recommendations. |
| Incorporate Real-time Changes | It incorporates real-time changes and facilitates the process. | It does not show real-time updates, sometimes traders might suffer losses due to unawareness of new changes. |
| Mode of Transaction | Automatic and paperless. | Manual |
| Reach of Network | National as well as international trades | Limited access to stocks. |
Why Traders Prefer Online Trading Over Offline Trading
With only a few clicks, online trading enables investors to keep an eye on their assets and see how their money performs throughout the day. Online trading is quick and effective since money transfer is instant. This speedy exchange of money also guarantees faster financial gains. Here is a list of reasons why online trading is better than offline trading.
1. Convenience:
Online trading only requires an online trading account, and as long as there is an internet connection, the investor does not face any restrictions due to time or location. Online trading is convenient, hassle-free, and time-saving.
2. Affordable Low Brokerage:
In comparison to offline trading charges, the brokerage for online investors is lower. An investor should choose the trading platform with minimum brokerage after comparing all options available in the market.
3. Know the Status of Investments in Real Time:
Online trading enables traders to keep track of their investments at any time to see how their money is performing throughout the day.
4. No middleman Problem:
There are fewer intermediaries because traders can buy and sell digitally and directly through online trading, without speaking to a broker. This facility aids in lowering trading expenses and increases the profitability of investing services.
5. Quicker transactions:
After trade execution, the transfer of money is instant, which makes online trading quick and effective. This speedy exchange of money also guarantees faster financial gains.
6. Paperless transactions:
Your trading account receives the share certificate in electronic form. So, there is no stress about keeping transaction papers safe. Online trading is safer than offline trading as SEBI regulates it and no one can perform trades on the trader’s behalf.
To Sum up, For the stock exchange, investors, and businesses, the online trading system makes it easier to access the necessary data and spread awareness of the current situation of the stock market. Additionally, online trading aids the investor in making hassle-free judgments and in comprehending the authentic state of the listed companies.
Through the mobilisation of savings and the subsequent investment in the capital market, online trading builds a link between savings and the capital market and is crucial to the growth of the economy. Online trading attracts investors with high returns, tax benefits, less time consumption, no explicit paperwork, etc.