Know All About Online Trading Options
Online Trading as the name indicates the process of doing the trades through web online. It does not involve the physical presence of the person at the place of the trade. One classic example can be the stock market trading where the shares are purchased and sold through online trading by people sitting across the world. Though all such transactions are deemed to have taken place on the floor of the stock exchange but the actual presence of the persons entering into such transaction would not be required there.
Online trading provides more liquidity in the market as the same capital and funds turns over very frequently as compared to the manual trading platforms. In case of manual trading in the capital market, the shares were found to be more stagnant and were supposed to get transferred in 7 to 10 days time during weekly settlement cycles however the same transfers are effected on the 2nd day in case of Online trading hence the liquidity in the stock market increases.
One of the instruments of trading is the option trading where the contract to buy and sell between the parties takes place at one point of time but the actual transaction of buy or sell happens at a future date. The buyer or the seller agrees to complete the transaction at a pre determine price with the pre determines period.
In this transaction the buyer has to pay the seller a partial amount called premium. The transactions remain open till the last date as agreed post which it gets automatically squared off by the stock exchange and the profit or loss is decided accordingly.
Explain Benefits of this System
The benefits of the Online trading includes :
• Accuracy and Transparency in the transactions
• Transactions happens very fast as compared to the physical mode
• Settlement of the trades are automated hence not time consuming
• Participants are able to enter the market more prepared and with more awareness
• It has reduced enormous costs involved in the case of physical trades
• It can be monitored very efficiently by the regulatory bodies as transaction details becomes very handy
• It helps the traders to put stop loss option where they losses can be controlled in case of heavy fluctuations in the prices
How it Happens
Online option trading doesn’t require the interaction of the buyer and seller and the transaction completed based on the quotes as provided on the online trading platform on the date of contract.
The quotes are available on the screens to carry out the transaction of buying or selling. It allows various players to participate hence it cannot be driven by single broker or a group of brokers to drive it widely. It requires the interested person to open an account with the authorized brokers who provide online platform for trading. It is like operating a bank account online and doing transactions – Loan Places Near Me