Stock Market On-Line refers to the trading of stocks and derivatives away from the stock markets or stock exchanges. Nowadays, with the advent of the age of Information Technology, the trading of the stocks and derivatives can be done through Internet or On-Line. This is also termed as On-Line Stock Trading. This is done through computer terminals. These terminals can be located at the broker's office or somewhere else. If a buyer wants to buy a particular company's share, he can have all the necessary information about that particular company from the Internet like what has been the revenue of the company, what is the total asset value of the company, and what is the trend of net profit that the company is earning over the last few years. He can also have an idea about the Price Earning Ratio (P/E Ratio) and the Earnings Per Share (EPS), which are important determinants for taking a decision for buying a share. The price movements of the shares and stocks can be monitored very closely over the Internet. A buyer has the options to evaluate and decide which company's share to buy and which company's share not to buy. The buying and selling orders both can be placed over the Internet.
The Electronic media plays a significant role in the field of Stock Market On-Line. It provides a variety of useful information about different companies to the investors through a number of television channels. By watching those TV channels, the investors can develop an idea about the financial health of a particular company.
If a buyer has a home PC and Internet connection, then there is no need to go to the broker's place or where a computer terminal is located. He can very well do the buying and selling of shares sitting in his home. Generally, there are two methods of doing On-Line Stock Trading. One is the Intra-Day Trading System or otherwise known as Day Trading and the other one is called the Delivery System. In case of Intra-Day Trading, the buyer or seller does not hold the stock for a long time; the buying or selling is done within a few hours. This is a risky method. In case of Delivery, the stock can be held for a long time, and it can be sold later. The margin of profit or loss is credited or debited electronically to the investor's bank account.
There are three types of investors, one who holds the stock for a period ranging from six months to whole life, another type is one who holds the stock for a period of one week to maximum six months (Position Traders), and the last type is one who does not hold the stock for more than few hours (Day Traders) and the buying or selling is done within the same day.
An investor can do On-Line Stock Trading on one’s own, but one can also authorize an agency to do the trading on his behalf. The firm or agency has to be paid a brokerage or commission fee for that.
There are different kinds of rules and regulations that are prevalent in different countries, but in India if anyone wants to trade in stock, he has to have a Demat Account.
The rules and regulations of On-Line Stock Trading in different countries are governed by different authorized bodies, like the SEBI (Securities Exchange Board of India) is the regulator of On-Line Stock Trading operations in India.
Some of the important Securities Firms who perform On-Line Stock Trading are UBS AG, Credit Suisse Group, and Goldman Sachs Group Inc.