All investments in the stock markets have to be routed through trading platforms. Before the digital era, traders had to rely on brokers to buy and sell assets. Offline trading was both time and effort-intensive, not to mention expensive. However, with the introduction of online trading in the stock market, investors can now place and cancel orders online, anytime and from anywhere. Online trading has made trading accessible and convenient for millions of people.
In this article, we cover the chief differences between online trading and offline trading.
What is online trading?
Online trading refers to the buying and selling of assets through your broker’s internet-based digital platform. In other words, online trading is the digital counterpart of offline trading, allowing you to trade from the comfort of your home.
To start trading online, investors must open a Demat and trading accounts with a Depository Participant (stockbroker). Thanks to digitisation, you can complete the account opening process online. Most brokers have multiple trading platforms, like mobile trading apps and desktop-based software, to help you get started. Once you’ve acquainted yourself with the various online trading platforms, you can leverage online trading platforms to start investing and trading in a wide range of assets like stocks, ETFs, mutual funds, futures, and currencies in real time.
What is offline trading?
Offline trading is the conventional trading system, where the role of the stockbroker is paramount. In offline trades, the broker is an active intermediary, executing the trade on behalf of the trader. So, if you’re trading offline, you must communicate the order details to the broker, who then completes the trade for you.
Since you must communicate order details to the broker in person or over calls, offline trading involves significant time delays. While offline trading was the norm back in the day, today, it has lost its appeal, given the convenience and apparent benefits of online trading platforms.
Online trading versus offline trading
The introduction of online trading has revolutionised the stock market. The following comprehensive list of differences between online and offline trading makes these revolutionary changes apparent.
Parameter |
Online trading |
Offline trading |
Trading ease |
Traders can make trades without the broker’s active assistance |
All trades need to be routed through the broker, creating greater dependency |
Platform |
You have access to a single integrated platform for both research and trade |
You must diligently research investment options before asking the broker to execute a trade |
Trading fees |
The lower brokerage fees involved in online trading bring better profit margins |
Brokers charge higher fees for offline trades, resulting in lower profit margins from trades |
Convenience |
You can trade 24x7 if you have access to a working internet connection and an electronic device like a smartphone or laptop |
You need to call your broker to place a buy/sell order. Frequent visits to the broker’s office are also common |
Real-time information |
Easily accessible real-time stock price and securities reports allow you to make informed investment decisions |
There is a time lag in sharing information. Since the stock market updates every second, you tend to miss out on real-time information before placing or selling orders |
Guidance and expertise |
Online trading platforms offer analytical insights, in-depth fundamental studies, and technical asset analysis reports. So, you have hard facts to back your investment decisions |
Your broker’s advice may or may not be backed by substantial in-depth research. Well-experienced brokers may provide you with valuable guidance |
Security |
Highly secured trading mode since you have complete control over trades |
Brokers can sometimes carry out transactions without your knowledge |
Speed |
Trades can be executed quickly since the entire process is digitised
|
Trades can take longer to execute, given the manual interventions involved |
When should you choose offline trading?
Reviewing the differences between online and offline trading suggests that the former has a clear edge over the latter. While online trading is undoubtedly more efficient, convenient, secure, and quicker, it may not always be the right choice for a trader.
Offline trading is a better alternative for novice investors who require personalised guidance to navigate the stock market. Reputed offline brokers with years of proven expertise can offer one-on-one advice and market analysis to new investors.
Similarly, even some experienced investors with a good long-standing relationship with their brokers prefer offline trading due to the comfort factor. Lastly, offline trading also comes in handy when traders don’t have access to high-speed internet services.
What are the additional benefits of trading via an online trading account?
While the differences between offline and online trading have made the benefits of online trading apparent, here’s a detailed list of some add-on benefits.
- Time-saving - Time is a chief factor when trading. Online trading allows you to execute trades in a few clicks, saving precious minutes.
- Real-time information - You can assess live charts and resources to determine market dynamics and make informed investment decisions. Access to real-time price shifts and market changes allows you to track emerging trends and tweak your portfolio accordingly.
- Fraud protection - While your online trading account is protected using several ingenious tools, including SSL (Secured Socket Layer) encryption, secured servers, and system monitoring software, each online trade is registered with SEBI (Securities and Exchange Board of India). Moreover, two-step authentication for digital transactions also minimises the chances of impersonation and fraudulent trades.
What are some online trading platforms?
- Mobile app-based - Most brokerage firms offer mobile app-based trading platforms for Android and iOS smartphones. These apps have a simple interface and allow you to trade while on the go.
- Desktop-based - You can download desktop-based trading software on your laptop or PC to execute trades in a few clicks. This type of software uses shortcut keys to make quick trades easy.
- Web-based - You don’t need to download software for a web-based platform. Instead, you can access the platform with the web URL provided by your stockbroker using search engines.
Conclusion
The differences between online trading and offline trading of stock highlight the pros and cons of each. While traders and investors prefer online trading for its enhanced security, practicality, and real-time insights, offline trading can be a better alternative for those with a long-standing relationship with their brokers.
While acknowledging the differences between online trading and offline trading is important for an investment, you don’t necessarily have to pick one over the other. You can try both as a trader and see what fits your trading style. Moreover, many reputed brokerage firms now offer both online and offline trading platforms, combining the speed of online trading with the personalised experience of offline trading.
