Share Trading Process

Types of Share Trading

Mainly there are two ways of share trading.

• Online Share Trading
• Offline Share Trading

Online Share Trading

Doing share trading with the help of computer, internet connection and with trading and demat account is called Online Share Trading.

If you would like to do online share trading then you need to have a computer, internet connection and online trading account.

If you are planning to do trading yourself then opening online share trading account is advisable.


Basically people who want to trade themselves use online share trading.

Essential of Online Share Trading


1. Online trading account - You have to open an online trading account with any of the bank or financial trading system. There will be nominal annual charges but in fact nowadays some of them are offering free accounts.

To have the list of brokers please see the bottom of this page. Please also read the certain precautions which you need to take while opening the demat and trading account.

2. A computer with internet connection but nowadays some people do trading in internet cafe. Due to fall in electronic prices the computers are available at very affordable prices in the market. If you have electricity problems then you also need to have inverter.

Nowadays you can get internet enabled on your cell phone (which is called GPRS) whose speed will be sufficient to do trading and also the charges of GPRS are very nominal. Also internet broadband connection is available.

3. After successfully opening the online trading account you will receive the username and password with the help of which you can login in online trading system and trade yourself.

4. The trading system executive (with whom you opened trading account) will help you initially about how to use the online trading system. In fact you can also request for demonstration of their trading system before you open the trading account with them.
Once you get familiarized with the system then you can trade yourself at your home or in the internet cafe.

Benefits of Online Share Trading


1. There is no need to depend on any broker or anybody else to place the order or to square off your order. In short you are the boss of your own to do trading (buying and selling) of shares.

2. Its reliable, convenient and you can take your own decisions yourself by actual seeing or analyzing the market on the computer screen instead of calling the broker all the time.

3. It is not possible or practical for a broker to update you about each and everything about the share market, news which will influence or affect the share market. Because he may be having many other customers like you and even if he updates you it would be late and this news would have been affected the concerned sector or share. So if you are doing online trading yourself, then you may save yourself from big disaster by booking profit or by coming out of the stock.

4. You will get news and updates on various websites and also on your online trading system and most of the information will be free of cost.

Please note - “Always remember share market always get influences (or affected) by the appropriate news. So get updated or be in touch with news all the time. This will benefit you always.

5. By doing online trading yourself, you can see and judge where market (or your share) is heading by seeing different graphs online yourself, which is not possible if you’re trading through broker. Some online trading systems have graphs integrated in their system, so your job is to just add those graphs and check the status of current market (or share) and depending on your analysis you can take steps towards successfully trading. (How to analyze graphs are mentioned in different sections).

6) All your transactions and related documents can be seen online and can also be downloaded to your PC without depending on your broker. You can also check the status of your amount on daily basis through you online trading system.

Disadvantages of Online Trading

1. In online trading system you may face problem of disconnection of internet due to which you will not be able to login to your online trading system and hence you will not be able to do trading yourself. At such critical times you have to call your trading system executive and ask them to square off your transactions if they are open.

2. One may face other problems such as electricity cut-off, PC problem etc during online trading then immediately you have to contact your trading system executive and place orders. Inverters can be used in case of electricity cutoff.

Offline Share Trading

Doing share trading with the help of broker or through telephone is called offline share trading. In other words trading will be done by another person on your behalf based on the instructions given by you. The other person would be a broker. The broker will do buying and selling of shares on your behalf depending on the instructions given by you. So in offline share trading you don’t need to have computer, internet connection but you need to have the offline demat account

Important terms in share market

Open - The first price at which the stock opens when market opens in the morning.

High - The stock price reached at the highest level in a day.

Low - The stock price reached the lowest level in a day.

Close - The stock price at which it remains after the end of market timings or the final price of the stock when the market closes for a day.

Volume - Volume is nothing but quantity.

Bid - The Buying price is called as Bid price.

Offer - The selling price is called offer price.

Bid Quantity - The total number of shares available for buying is called Bid Quantity.

Offer Quantity - The total number of shares available for selling is called Offer Quantity.

Buying and selling of shares - Buying is also called as demand or bid and selling is also called as supply or offer. First selling and then buying (this only happens in day trading) is called as shorting of shares or short sell.

Share Trading - Buying and selling of shares is called share trading.

Transaction - One complete cycle of buying and selling of shares is called one transaction.

Squaring off - This term is used to complete one transaction. Means if you buy then have to sell (means square off) and if you sell then you have to buy (means square off).

Limit Order - In limit order the buying or selling price has to be mentioned and when the share price comes to that price then your order will get executed with the price mentioned by you.

Market Order - When you put buy or sell price at market rate then the price get executes at the current rate of market.The market order get immediately executed at the current available price.

Stop Loss Orders - Stop loss orders ("stops") are limits set by traders at which they willautomatically enter or exit trades - an order to buy or sell is placed in the market if price reaches a specified limit.