As the pandemic hit the globe, millennials who were rather bored due to quarantine stepped into the world of trading. Most of them were either lured by cryptocurrencies or saw stocks as a good way of multiplying their wealth.

As stockbrokers provided an easy onboarding process to new traders, the number of investors who signed up on trading applications soared rapidly. The option of online account opening provided an easy means to start trading to individuals who were thinking about how can I open a demat account.

The exponential rise in the number of smartphone users and cheaper data plans have also contributed to the increase in online traders. In the US alone, more than 50% of the population has invested in stocks already. In India, the number of demat accounts has grown twice in the last 3 years. These figures show that online trading will continue to attract new retail investors in the coming future.

In India, 14.3 million new accounts were added in 2021 by CDSL and NSDL.

In January 2021, around 1.47 million demat accounts were opened by CDSL alone which is thrice as compared to the demat accounts that were opened in January 2020.

According to NSE data, the share of retail investors in cash market turnover has elevated to 45% in 2021-20 as compared to 39% in 2020-19.

Factors affecting the adoption of online trading:

Online trading has gained momentum over the years as it provides these advantages to investors:

Convenience:

You don’t have to go anywhere to buy and sell securities as everything can be done within a few clicks while you are sitting on your couch sipping coffee!

Also, you don’t have to visit the office of the stockbroker to collect the physical certificates of the securities in which you have invested. It is because the securities get directly transferred to your DEMAT account, where they are stored in electronic form.

Flexibility:

With an online trading app, you can monitor the performance of your stocks live. Also, you can invest in international markets without any assistance from an agent or broker. Keeping abreast of the latest news and events is possible by enabling the notifications alert in the trading app. Such flexibility cannot be provided by an offline trading system.

Easy prediction of the market’s behaviour:

Access to information was limited when the majority of the trading happened offline. You had to rely on the brokers to cash in on a collapse or bull run, and by the time you made a move, the opportunities were no longer lucrative.

With the easy availability of market research tools and applications, it is easy to forecast market behavior on your own and predict whether the price of a stock will rise or fall. As you keep using these tools, you gain more knowledge of how the market behaves in specific conditions and can figure out the right time to invest and which investments and companies to invest in.

Cashing in on more opportunities:

Online trading allows you to trade in stocks, futures and options, corporate bonds, currencies, commodities, and other securities. When you diversify your investments across multiple asset classes, the risks get minimised and you get more opportunities to earn.

Deploying the latest trading techniques:

The introduction to newer ways to execute trades like algo trading enables you to generate profits quickly and at a higher frequency. It is because the orders are executed by a programmed algorithm that generates signals to buy or sell stocks. Human intervention is still required as retail traders cannot fully automated trading.

You can also deploy your own algorithm on the basis of your research and knowledge to enhance your earning opportunities through online trading.