You need to possess a certain level of knowledge before venturing into the domain of share trading. Information good to have for this is an understanding of the difference between offline and online trading i.e. Online vs Offline Trading. Offline trading was the way before the advent of the internet. It is still prevalent in this era of digitization. The Internet and computers changed things for the better. Now trading is accessible in every corner of the world and to people of different financial standing. The Internet and computers changed things for the better. Now trading is accessible in every corner of the world and to people of different financial standing. Before the introduction of online trading, the procedures were irregular, time-consuming and cumbersome. The Internet made stock trading systematic and easily manageable.
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What is Offline Trading?
Offline trading is the traditional approach to stock trading. A broker conducts transactions on your behalf in this method. The role of a broker is very important in this method as it is the brokers who carry out the procedures as per your wish. A broker may be an individual or a firm. This method is still prevalent but has lost its popularity due to several benefits offered by online trading platforms. Offline trading is done by people who have long experience working with a trusted broker. It is also the preferred method for people, who are not comfortable using technology.
What is Online Trading?
Online trading is a much more simplified and digitized type of offline trading. Here, traders buy and sell stocks by using a brokerage’s internet-based trading platform. The trading is directly done by the individual themselves without any middlemen. Online trading accounts are usually linked to a Depository Participant as well as a bank account (mostly to one with which the broker has a tie-up).
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Online vs Offline Trading
It is important to understand the key differences between online and offline trading. They are compared according to different criteria in the following paragraphs for a better understanding of readers.
Ease of Trade
The ease of trade is more in online trading. Read the points below to understand more about this subject.
| Online Trading | Offline Trading |
| Transactions are done individually | Transactions are done via a broker |
| The decision of the trader is not influenced by any external mediums | The decision of the trader is always influenced by the broker |
| Only require internet and devices to conduct transactions easily | The trader has to physically approach and be present and the broker’s office or make detailed phone calls to give instructions to the broker on how to carry out the transaction |
| Inexpensive as the process is done by the trader | Expensive as most brokers demand a large fee |
Convenience
When it comes to online vs offline trading, online trading is considered to be more convenient for users. All you need is an appropriate device, full-time internet and sufficient technological expertise. Offline trading is for people who prefer personalized services and expert advice for making trade-related decisions. Lack of internet and not being tech savvy can also make a person choose offline trading over online trading. But lengthy phone calls and in-person visits to the broker’s office are off-putting for the newer generation of traders.
Platform
- In the case of online trading, a single platform can be used to access assets of various classes including shares commodities etc.
- For offline trading, the trader has to consult several platforms and conduct their research before instructing the broker on what to do.
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Advice Quality
Detailed reports with trends, patterns and price movements are accessible in online trading and hence the trader can make informed choices when it comes to buying and selling stocks and securities. In offline trading, you should have the utmost trust in the information given by the broker. It could be good or bad and is entirely dependent on the broker you have. Their decision may not be properly researched and may be influenced by their biases. On the other hand, they could have years of experience which could help them accurately predict the results of their decisions.
Cost Efficiency
When it comes to online vs offline trading, online trading is considered to be more economical. There are no brokerage charges to be paid so the entire profit will come to the trader. In the case of offline trading hefty brokerage fees can adversely impact your profit.
Security
Since you have complete control over the transactions being made, online trading is a more secure option. In offline trading, the brokers may make mistakes in following the instruction given to them or even undertake transactions without your permission. Both of these will bring loss to the trader.
Real-Time Information
- A trader should have access to real-time information at all times. They should keep themselves updated constantly about the trends of the stock market. They should know immediately if there is a crash or boom. Online trading has this advantage as the real-time information keeps getting updated on their platform keeping them up with the events.
- You have to get information from other sources including your broker. There is a time lag that is produced by this. This will certainly decrease your chances of success in the market.
Fraud
It is virtually less possible to commit fraud in online trading.
| Online Trading | Offline Trading |
| Is protected by multiple layers of cybersecurity | Fraud can happen in the form of impersonation, |
| SEBI monitors and regulates online trading very closely to prevent potential risks | Forging of documents and signatures is also possible |
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Knowledge and Experience
When it comes to online trading there are high-quality and thorough study reports and analytical insights which can be accessed via the brokerage platform. This will certainly help you in making informed decisions. While in the case of offline trading, it’s entirely dependent on the expertise of the broker. If the broker has several years of work experience and knowledge of trends and patterns the stock market might follow, then their advice is more valuable than any statistics.
Quickness
- The entire process is digitised in the case of online trading. So there is no need for documentation. This helps to complete the transactions at a high speed.
- In the case of offline trading, a lot of manual intervention is required. This makes the process time-consuming.
Online vs Offline Trading: Which is Better?
Which is better, online or offline trading? This question lingers in the mind of any inquisitive reader after reading the whole article. To tell the truth, there is no right answer. It should be decided according to the preference of the trader. Online trading is surely a step ahead with being very convenient and fast. But you don’t even have to choose between these two options. Now many brokerage firms are providing a combined package of online and offline trading. This will help you gain the best of both worlds and increase your profits on investments.
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Online vs Offline Trading FAQs
- What are the documents required to open an online trading account?
Documents such as a PAN card, a passport-sized photo, an Aadhaar card and any proof of income.
- Are online trading platforms and apps safe?
They are safe if you are using a reputed broker. All the trades and account details are securely managed using encryption. This guarantees high-end protection from deceptions.
- Can NRIs do online trading in India?
Yes, according to the portfolio investment scheme, they can. But there are some restrictions. Only mutual funds, equities, and IPO through NRE/NRO accounts are tradable options for NRIs.
- What cannot be traded by NRIs?
NRIs cannot trade delivery and currency derivatives. Short selling is also not allowed for NRIs.
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