As every industry sector is moving towards digitisation, physical trading is no longer preferred by investors. Gone are the days when you needed a middleman to place physical trades on a stock exchange on your behalf. Investors can now access diverse securities at their fingertips with the help of online trading platforms. Let us discuss some tips to become a successful online trader in India.
Basics of Online Trading in India
Before delving deeper, you must understand the meaning of digital trading in India. Digital trading refers to the process of investing in securities with the help of electronic systems. It is the buying and selling of different assets via an online platform or portal. Investors rely on trading platforms to purchase or sell a wide range of securities, like ETFs, mutual funds, derivatives, equities, and commodities. A digital trading platform in India can be a web-based portal or a mobile application, depending on the service provider.
Besides the investment platform, you also need a brokerage account for digital trading in India. A brokerage account enables investors to place buy or sell orders. Your brokerage account will be linked with a Demat account for holding electronic securities. Securities purchases via your brokerage account will be dematerialised and stored in the Demat account. Both these accounts can be accessed via the investment or trading platform. The investment platform will also help with research and informed decision-making.
Online Trading Tips in India
Now that you understand the Demat account meaning and the significance of a trading platform, here are some tips for online trading in India:
Leverage the Power of Virtual Trading
Beginners might not understand how the stock or commodity market works. They must understand the interrelationships between the market conditions and the price of securities. It can be done through paper or virtual trading, which does not utilise real money. Even though you do not use real money in virtual trading, the assets perform as they would in the actual market. Beginners can know the mistakes they are making before trading with real money. Many investment platforms have a virtual trading feature for newbies.
Say No to Aggressive or Emotional Trading
Your investments will depend on research and analysis. You cannot invest in a particular asset because your friend said so. Emotional decisions must be avoided to become a successful trader. Some investors might indulge in aggressive trading to make the most of market ups. However, there is always a risk involved with aggressive trading in Indian markets. Investors often forget to perform research or analyse all investment factors while trading aggressively. Not to forget, there is a risk of losing a large trading capital with aggressive trading.
Market ups and downs can be unpredictable at times. You must protect the portfolio from market risks to earn high returns. It can happen when you invest in diverse securities. Spread your investments across various securities. Even if some assets do not perform as per expectation, there are others to keep the portfolio strong.
Develop an Investment Strategy
You must know what works for you in online trading. Based on your financial goals, preferences, and resources, develop a strategy.
Prioritise Portfolio Tracking
Investors must rebalance or realign their portfolios at times. However, it is possible only when investors keep track of the portfolio performance. Track your holdings and asset performance at all times to make informed and timely decisions.
Online trading is an art, and one can master it by following the right strategies. Beginners can choose a new-age investment platform to get research support. Avoid compulsive or emotional decision making to succeed as an online trader in India. Develop your investment strategy and start trading today!