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Advantages and Disadvantages of Online Trading

Online trading is very popular tools for buying and selling of financial products. There are so many advantages of online trading and below we mention some benefits of online tradings.

1. ELIMINATION OF PHYSICAL BROKER

Online trading frees you from the hassle of going to the broker’s office or calling him to buy / sell. Most of the time the phone in the broker’s office is busy and it takes a long time to match your call. It may also be a mistake to listen to the shares you mentioned and their number. All this can be avoided by this.

2. MULTIPLE OPTION FOR TRADING IN ONE PLACE

The investor can invest or trade in all types of options. Can invest in new IPOs, Bonds, Mutual funds, Gold, Commodities.

3. REAL TIME PRICE

You can immediately see the fluctuations in the market price or index, the chart of any stock and its historical price level.

4. TRADING CONTROL IN YOUR HAND

You can register in advance as well as set stop loss (this facility is only available on certain terminals) and set time alerts. You can keep a list of shares.

5. EASY DEPOSIT & WITHDRAWAL

You can immediately deposit the amount from the bank account linked to the account for shares. Or you can deposit the after-sales profit in your bank account immediately. When to check the details of transactions on the account. Experience secure transactions on all fronts can be gained through this.

6. GLOBAL MARKET UPDATE

It is a wonderful experience to trade in the world’s top stock market.

7. EASY MARKET ACCESS

You can buy/sell shares at any platform. Get real time market information about companies and stocks. Trades can send order from web, Desktop, Mobile App. Expert recommendation and investment advice easy available.

8. FLEXIBILITY OF TIME

You can place orders before start of a trading session. order can be placed offline during non-market hours.

9. PAPERLESS TRANSACTION

Your share certificate get deposited in electronic forms (Demat) in your trading account.

10. RECORDS & REPORTS

Records and reports of all transaction available at clicks.

Advantages of Commodity Trading

Online commodity trading comes with many pros. Some of these are as follows:

1. Facility for high leverage

Futures, options, and other commodities derivatives provide an exceptionally high amount of leverage. You have the option to buy and sell these commodities with less than actual margin. Any move in the prices of commodities online that is considered insignificant can result in gains that are exponential.

2. Hedge against political tensions

Geopolitical tensions are the another hedge that investors get from commodity trading. Events like wars, riots can directly disturb the supply chain which result in shortage of resources. So physical procurement and transfer is almost impossible in that scenario. A commodity online must have a physical counterpart that will be bought and sold by the investor. The raw materials made into finished goods are disturbed in their supply chain as a result of geopolitical tension. Due to the supply and demand disparity, the prices of commodities can rise exponentially. In these events, there is strong uncertainty within the market that causes stock prices to drop hugely. This is also why investing in commodities can help in restricting losses that one sees in one investment portfolio

3.Protection against inflation

Rise in demand of product will straight away increase the price of the product and the raw material used to produce that product. This leads to increase in the production of the product which in turn reduces the net income of the company. Once company income reduces, stock prices will drop.

whereas the price of commodities that are used in the engineering of complete goods can largely rise as it is seeing a increase in demand. At the end of the day, the climbing prices of final goods that are overblown are connected with the price of the commodities that prepared them. Hence, investors often run away to commodity futures so they can guard their money from the effect of price rise while maintaining their value.

Disadvantages of Commodity Trading

The main disadvantage of commodity trading is that commodities are highly volatile as they are dependent on demand and supply factors. A slight change in supply due to geopolitical tensions or conflicts can adversely affect the prices of commodities. Hence investor caution is advised in commodity trading.

1. Leverage

Low margin prerequisites can encourage poor money management, which can in turn lead to unnecessary risk taking. Thus in this case, not only are the potential multiplied, the potential for losses is also increased many folds! Volatility

2. Speed of trading

Commodities used to be traded in the pits. Thus in order for any order to executed, an investor or speculator need to contact his broker who in turn will transmit this order to the pit trader. Upon executing the transaction, the pit trader with inform the broker of the trade who will pass the confirmation to the client. Due to the time lag, the chances of slippage occurring is high.

3. Not diversification friendly

The typical thought is that there is a low to a negative correlation between the prices of stocks and those of commodities. As explained earlier, when stock prices are dropping, commodity prices increases drastically. However, this theory or assumption did not hold true during the 2008 financial crisis, when the prices of commodities like gas and oil fell drastically along with stocks. In the financial crisis that ensued in 2008, there was a drop in the overall demand for commodities which resulted in large-scale unemployment, which further halted production.

4. Risky Business!

Trading in commodities has been regarded as something just for the experts. Many traders have lost money and the trade is regarded as an extremely risky venture.

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DISCLOSURE

Disclosure of Proprietary Account Trading by Members to Clients Proprietary Trading Disclosure:In terms of provisions of the Rules, Bye-Laws and Business Rules of the Exchange and with reference to circular MCX/T&S/147/2016 dated May 17, 2016 regarding Disclosure of Proprietary Account Trading by broker to client.,Pursuant to SEBI Circular Number SEBI/MRD/SEC/Cir-42/2003 dated November 19, 2003 & SEBI/HO/CDMRD/DMP/CIR/P/2016/49 dated April 25, 2016 BULLION CAPITAL. Discloses to its clients about its policies on proprietary trades. We does proprietary trading in the derivatives segment at MCX respectively.

Disclaimer: “Investment in equity / derivatives / currency and Commodity Futures Markets is subject to risk. Please read the risk disclosure document before investing”

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