A PROJECT REPORT ON

“ONLINE TRADING”

SUBMITTED BY
DASHMEET SINGH RATRA

T.Y.B.A.F [SEMESTER VI]

Name of the Project Guide

Dr. Allan D’Souza

SUBMITTED TO

GURU NANAK KHALSA COLLEGE OF ARTS SCIENCE AND

COMMERCE (AUTONOMOUS)
MATUNGA (EAST)

UNIVERSITY OF MUMBAI
ACADEMIC YEAR “2019- 2020”
 DECLARATION

I, Mr./Ms.“__________________________” of GURU NANAK

KHALSA College of Arts, Science & Commerce, studying in
T.Y.BAF (SEMESTER VI) hereby declare that I have completed
my project, titled “ONLINE TRADING” in the academic year
2019 - 2020.

Wherever the information have been taken from any book or other
sources the same have been mentioned in references.

The information submitted herein is true and original to the best of

my knowledge.

……………………...
Student’s Signature
(Roll No. )

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 2

 ACKNOWLEDGEMENT

I have a great pleasure in preparing my project report on

“___________________________________________________”

I sincerely thank with deep sense of gratitude to Dr. Allan D’Souza,

our guide for his / her kind co-operation for the fulfilment of this
project.

I am highly indebted to our honourable principal who took keen

interest and allowed us to perform this project.

I would like to thank our seniors, librarians who sincerely helped me

getting this information and last but not the least, sincere thanks to
college for a big reason that I am here in front of you presenting this
project.

…..….………………

Student’s Signature [Roll.No__]

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 3

 CERTIFICATE

This is to certify that Mr. / Ms.______________________ Roll

No._______ of BAF (Bachelor of ACCOUNTING AND
FINANCE) studying in VIth Semester, has undertaken and
completed the project work titled,
“___________________________________________”
during the academic year 2019 - 2020.

The project was completed successfully under the guidance of

Dr. Allan D’Souza.

This is bonafide project. The said work and information

presented in it is true and original to the best of our knowledge
and belief.

__________________________ ________________________
Signature of Course Coordinator Signature of I /C Principal

________________________ ________________________
Signature of Project Guide Signature of External
Examiner

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 4

 Table of Content

CONTENT PAGE
NO.
1. EXECUTIVE SUMMARY
6
2. INTRODUCTION 7-32

3. REVIEW OF LITERATURE 33-34

4. RESEARCH METHODOLOGY 35-36

5. DATA INTERPRETATION 37-45

6. FINDINGS 46

7. SUGGESTIONS AND RECOMMENDATIONS 47

8. CONCLUSION 48

9. BIBLOGRAPHY 49

10. ANNEXURE 50-51

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 5

 EXECUTIVE SUMMARY
This project is based on “ A STUDY OF ONLINE TRADING IN STOCK MARKET” .
Further , this project includes review of literature and the introduction of the company
wherein the project tells about the various advantages and disadvantages
The rapidly advancing technology, particularly the Internet, has drastically changed the
social and economic landscapes and every aspect of our daily lives. In the securities
industry, the Internet has facilitated on-line trading, changing the way the market works,
as well as the way the investors access the market. Having taken advantage of information
technology at an opportune time, India has emerged as a front-running country of on-line
trading in the global securities markets. Online trading India is the internet based
investment activity that involves no direct involvement of the broker. There are many
leading online trading portals in India along with the online trading platforms of the biggest
stock houses like the National stock exchange and the Bombay stock exchange. The total
portion of online share trading India has been found to have grown from just 3 per cent of
the total turnover in 2003-2004 to 32 per cent in 2007-2008.

Online trading has become very popular in the last couple of years because of the
convenience of ease and use. Numerous companies have gone online to meet their
customers‟ demands, enabling them to trade when they want and how they want to.
Trading has existed for as long as we can remember and when we talk about it, we are
refereeing to trade as in financial dealings. Trading is the buying and selling of goods and
services, but in the current context, it is the buying and selling of financial services,
including securities, through the World Wide Web.

On-line trading” is broadly defined as a trading mechanism where investors place orders
and confirm trading results via electronic communication channels, such as the Internet,
mobile phones, and Personal Digital Assistants (PDA). In Korea, the whole process of
securities transactions, from order placement and routing, order execution, to trade
confirmation, is fully automated, thus enabling the investors who have placed orders to
confirm their trading results within a few seconds.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 6

 INTRODUCTION TO ONLINE TRADING
Online Trading is a service offered on the internet for purchase and sale of shares. In the
real world, you place orders on your stockbroker either verbally (personally or
telephonically) or in a written form (fax). In Online Trading, you will access a stockbroker's
website through your internet-enabled PC and place orders through the broker's internet-
based trading engine. These orders are routed to the Stock Exchange without manual
intervention and executed thereon in a matter of a few seconds. This way we allow
investors to view and manage a demo account in real time over the internet. Since no money
is actually at risk, this is an excellent way to evaluate our trading software. Live streaming
prices in NSE/BSE shares, indices, and commodities. Just click on the price to place a
trade. Instructions and your demo password will be sent to your e-mail address
immediately. Demo accounts are valid for 15 days.
Mastermarts provides you multitude of resources like live quotes, charts, research, advice
and online assistance which helps you take informed decisions. Our experienced team
provides you robust risk management system. And 128 bit encryption gives you a complete
security about money, shares, and transaction documents. The shares can be traded on
Mumbai Stock Exchange and National Stock Exchange while commodities can be traded
on National Commodity & Derivative Exchange, Multi Commodity Exchange and
National Multi Commodity Exchange.
There is nothing more exhilarating, more daring and more rewarding than making the right
trade at the right time. Welcome to our online-trading platform which brings you a world
class experience of online investing. Buying and selling of shares is now just a click away
through diet ODIN.

Definition of 'Online Trading’

The act of placing buy/sell orders for financial securities and/or currencies with the use of
a brokerage's internet-based proprietary trading platforms. The use of online trading
increased dramatically in the mid- to late-'90s with the introduction of affordable high-
speed computers and internet connections.
Stocks, bonds, options, futures and currencies can all be traded online. The use of online
trades has increased the number of discount brokerages because internet trading allows
many brokers to further cut costs and part of the savings can be past on to customers in the
form of lower commissions. Another benefit of online trading is the improvement in the
speed of which transactions can be executed and settled, because there is no need for paper-
based documents to be copied, filed and entered into an electronic format.
Online Trading is the process of trading through Internet. You have to open a demat
account with any brokers after that you would get your online trading details and you would
be able to trade yourself from anywhere. One trading means that direct access trading.
Direct access trading is a technology which allows stock traders to trade directly with
market makers or specialists, rather than trading through stock brokers.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 7

Meaning
The act or practice of buying and selling securities over the Internet Generally speaking,
online trading occurs when an investor makes an order to a broker online; the broker then
executes the order through the ordinary means. Online trading became more common in
the 1990s as more brokerages offered their services online, often for a small fee rather than
a commission on the trade. Online trading should be distinguished from electronic trading,
which occurs on an exchange. See also: Discount brokerage. Online trading.
If you trade online, you use a computer and an Internet connection to place your buy and
sell orders with an online brokerage firm. While the orders you give online are executed
immediately while the markets are open, you also have the option of placing orders at your
convenience,. Want to thank TFD for its existence? Tell a friend about us, add a link to this
page, or visit the webmaster's page for free fun content.

Overview
Prior to the advent of the Internet, investors had to call up their stockbroker and place an
order on the telephone. The brokerage firm would then enter the order in their system which
was linked to trading floors and exchanges.In August 1994, K. Aufhauser & Company,
Inc. (later acquired by TD Ameritrade) became the first brokerage firm to offer online
trading via its "WealthWEB".[1] Online investing has experienced significant growth since
that time. Investors can now enter orders directly online, or even trade with other investors
via electronic communication networks (ECN). Some orders entered online are still routed
through the broker, allowing agents to approve or monitor the trades.
This step assists in the protection of both the client and brokerage firm from unlawful or
incorrect trades which could affect the client’s portfolio or the stockbroker’s license.
Online brokers are most often referred to as discount brokers. Their popularity is
attributable to the speed and ease of their online order entry, and to fees and commissions
significantly lower than those of full service brokerage firms. Two types of online
brokerages have emerged.
One type of brokerage offering Direct-access trading to exchanges, such as Interactive
Brokers. While the other type of brokerage, such as TD Ameritrade route orders to Market
maker firms to have their orders filled. An example of a Market Maker firm was Knight
Capital Group, now known as KCG Holdings.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 8

History
Stock markets refer to a market place where investors can buy and sell stocks. The price at
which each buying and selling transaction takes is determined by the market forces (i.e.
demand and supply for a particular stock). Let us take an example for a better understanding
of how market forces determine stock prices. ABC Co. Ltd. enjoys high investor
confidence and there is an anticipation of an upward movement in its stock price. More
and more people would want to buy this stock (i.e. high demand) and very few people will
want to sell this stock at current market price (i.e. less supply). Therefore, buyers will have
to bid a higher price for this stock to match the ask price from the seller which will increase
the stock price of ABC Co. Ltd. On the contrary, if there are more sellers than buyers (i.e.
high supply and low demand) for the of ABC Co. Ltd. in the market, its price will fall
down. In earlier times, buyers and sellers used to assemble at stock exchanges to make a
transaction but now with the dawn of IT, most of the operations are done electronically and
the stock markets have become almost paperless.
Now investors dont have to gather at the Exchanges, and can trade freely from their home
or office over the phone or through Internet. History of the Indian Stock Market - The
Origin One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years
old history. 18th CenturyEast India Company was the dominant institution and by end of
the century, business in its loan securities gained full momentum 1830's Business on
corporate stocks and shares in Bank and Cotton presses started in Bombay. Trading list by
the end of 1839 got broader 1840's Recognition from banks and merchants to about half a
dozen brokers 1850's Rapid development of commercial enterprise saw brokerage business
attracting more people into the business 1860's The number of brokers increased to 60.
1860-61.
The American Civil War broke out which caused a stoppage of cotton supply from United
States of America; marking the beginning of the "Share Mania" in India1862-63 The
number of brokers increased to about 200 to 250. 1865 A disastrous slump began at the
end of the American Civil War (as an example, Bank of Bombay Share which had touched
Rs. 2850 could only be sold at Rs. 87) Pre-Independence Scenario - Establishment of
Different Stock Exchanges 1874 With the rapidly developing share trading business,
brokers used to gather at a street (now well known as "Dalal Street") for the purpose of
transacting business.1875 "The Native Share and Stock Brokers' Association" (also known
as "The Bombay Stock Exchange") was established in Bombay1880's Development of
cotton mills industry and set up of many others 1894 Establishment of "The Ahmedabad
Share and Stock Brokers' Association"1880 - 90's Sharp increase in share prices of jute
industries in 1870's was followed by a boom in tea stocks and coal 1908.
"The Calcutta Stock Exchange Association" was formed1920 Madras witnessed boom and
business at "The Madras Stock Exchange" was transacted with 100 brokers.1923 When
recession followed, number of brokers came down to 3 and the Exchange was closed
down1934 Establishment of the Lahore Stock Exchange1936 Merger of the Lahore Stock
Exchange with the Punjab Stock Exchange1937 Re-organization and set up of the Madras

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 9

Stock Exchange Limited (Pvt.) Limited led by improvement in stock market activities in
South India with establishment of new textile mills and plantation companies1940 Uttar
Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was
established1944 Establishment of "The Hyderabad Stock Exchange Limited"1947 "Delhi
Stock and Share Brokers' Association Limited" and "The Delhi Stocks and Shares
Exchange Limited" were established and later on merged into "The Delhi Stock Exchange
Association Limited.

Types of online trading

Online trading is fast and net based trading. Here, the investor place his own orders using
the internet trading platform offered by the trading member viz the broker. Before
investment, investors should know these 10 precautions and safety measures:1. The default
password provided by the brokers should be changed before placing an order.2. Ensure that
password is not shared with others. Change password at periodic interval.3. Investors
should have adequate knowledge on usage of the software before starting trading.4.
Investors should check for the conformation after placing the order.5. Placing order form
the shared PCs /through cybers cafes should be avoided.6. Don’t forget to long out after
having finished trading to avoid misuse.7. Ensure that one does not click on “remember
me’’ option while signing on form non regular location.8. Do not leave the terminal
unattended while one is “signed-on’’ to the trading system.9. Protect your personal
computer against viruses by placing firewall and an anti-virus solution.10. Investor should
always make sure that sufficient funds and securities are available in his account with the
trading member and that he is regular in payment of margins so as to blocking by account
by the trading members.

Online Trading Features

Pioneer In the year 2000, Geojit BNP Paribas pioneered the simple concept of providing
individuals with the facility to trade online. Ten years later, the award winning Mobile
Trading platform, FLIP-ME was launched for real-time Market Watch, Quotes, Market-
by-Price, etc. This revolution has given the company the first mover advantage in online
& Mobile trading.
• Safety
Every client is provided with a User Name and Password with 128 bit encryption along
with a virtual keyboard to provide the highest level of security.
• Multiple bank payment gateways

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 10

 Transfer money online in real-time to benefit from price movements in the market. Current
payment gateways: HDFC Bank, Axis Bank, State Bank of India, ICICI Bank, Citibank,
Federal Bank, Bank of India, IDBI Bank, Punjab National Bank & Union Bank
• Customer Care Website
o Provided to all Online and Offline clients
o Provision to apply for Online IPO
o Access to Ledger, Demat holding, Portfolio tracker, Contract notes etc.
o Transaction details of Cash, Derivatives & Currency
o Facility to subscribe for SMS
o Information related to support, resistance of each scrip
o Facility for Payout request , details of FAO rollover and Margin Requirement
o Information regarding scrips available for intraday and margin applicable for each
scrip.(Cash & FAO)
o Toll Free number 1800–425–5501 is accessible from most mobile and land line service
providers.
o E-mail service supported by Customer Care Centre.
o Additional support of Geojit BNP Paribas branches.

• Portfolio Margin System FAO Span Margin is calculated in real time. Hedging positions
are identified correctly in this system.
• Customized Services Subscription services are available for daily research and
recommendations, daily demat holdings, market tips and daily calls via SMS. And much
more!
• Graphs & Research Tools. Take informed investment / trading decisions using Graphs,
Technical analysis, News Wire18, etc. at zero cost.
• Technical Analysis Technical analysis, with support and resistance for BSE 200 Index
scripts, is offered FREE to all online clients.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 11

TOOLS AND TRADING PLATFORM
Electronic trading platform In finance, an electronic trading platform is a computer system
that can be used to place orders for financial products over a network with a financial
intermediary. This includes products such as stocks, bonds, currencies, commodities and
derivatives with a financial intermediary, such as brokers, market makers, Investment
banks or stock exchanges. Such platforms allow electronic trading to be carried out by
users from any location and are in contrast to traditional floor trading using open outcry
and telephone based trading.
Electronic trading platforms typically stream live market prices on which users can trade
and may provide additional trading tools, such as charting packages, news feeds and
account management functions. Some platforms have been specifically designed to allow
individuals to gain access to financial markets that could traditionally only be accessed by
specialist trading firms such as allowing margin trading on forex and derivatives such as
contract for difference.
They may also be designed to automatically trade specific strategies based on technical
analysis or to do high-frequency trading.
Contents
• 1 Etymology
• 2 Historic development
• 3 Trading platform standards

Etymology
The term 'trading platform' is generally used to avoid confusion with ‘trading system’
which is more often associated with the trading method or strategy rather than the computer
system used to execute orders within financial circles. Historic development Transactions
have traditionally been handled manually, between brokers or counterparties. However,
starting in the 1970s, a greater portion of transactions have migrated to electronic trading
platforms. These may include electronic communication networks, alternative trading
systems, "dark pools" and others.
The first electronic trading platforms were typically associated with stock exchanges and
allowed brokers to place orders remotely using private dedicated networks and dumb
terminals. Early systems would not always provide live streaming prices and instead
allowed brokers or clients to place an order which would be confirmed some time later;
these were known as 'request for quote' based systems. Trading systems evolved to allow
for live streaming prices and near instant execution of orders as well as using the internet
as the underlying network meaning that location became much less relevant.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 12

Some electronic trading platforms have built in scripting tools and even APIs allowing
traders to develop automatic or algorithmic trading systems and robots. The client graphical
user interface of the electronic trading platforms can be used to trade currencies, equities,
futures, or options and are also sometimes called trading turrets (though this may be a
misuse of the term, as trading turret refers to the specialized phone appliance used by
traders).

Trading platform standards

The National Futures Association (NFA) in the US lists the following general standard
requirements for forex electronic trading systems;
• Authentication (Passwords, Authentication Tokens such as secure ID cards; or digital
certificates)
• Encryption
• Transactions recording standard
• Pricing and slippage standard Trading platforms & tools that amplify the power Web
Platform. All the tools any level of investors needs to.
• Set alerts, create watch lists, customize your workspace, and more
• Access independent third-party research and planning tools• Explore innovative
educational resources on topics that matter to you.
Trade Architect
An intuitive trading platform for active traders who want to
• View streaming CNBC and real-time news
• Generate ideas and identify trends with heatmapping and independent research
TD Ameritrade is the leader in mobile trading with powerful mobile offerings for investors
and traders that want.
• A choice of device-optimized mobile apps.
• The ability to manage investments, seize opportunities, and more
• The power to trade directly from smartphones and tablets.
Precaution of online trading
• Online trading is fast and net based trading. Here, the investor place his own orders using
the internet trading platform offered by the trading member viz., the broker.
• Before investment, investors should know these 10 precautions and safety measures:
1. The default password provided by the broker should be changed before placing an order.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 13

2. Ensure that password is not shared with others. Change password at periodic interval.
3. Investors should have adequate knowledge on usage of the software before starting
trading.
4. Investors should check for the confirmation after placing the order.
5. Placing orders from the shared PC's / through cyber cafés should be avoided.
6. Don't forget to log out after having finished trading to avoid misuse.
7. Ensure that one does not click on "remember me" option while signing on from non-
regular location
8. Do not leave the terminal unattended while one is "signed-on" to the trading system.
9. Protect your personal computer against viruses by placing firewall and an anti-virus
solution.
10. Investor should always make sure that sufficient funds and securities are available in
his account with the trading member and that he is regular in payment of margins so as to
avoid blocking of account by the trading member.

The Advantages of Online Stock Trading

Once upon a time, the only way to trade stocks was through a stockbroker. These high-
powered men and women would take stock orders, make suggestions and then handle the
entirety of the actual buying and selling of stocks. With the proliferation of the internet,
brokers have become a commodity that is only used by those who intend to trade large
quantities of stock – usually either very wealthy individuals or businesses. The average
person no longer needs a broker because they can trade online. There are numerous benefits
to online stock trading, especially for casual traders.
The first benefit of online stock trading is cost. Brokers make their living working with
stocks and bring advanced degrees in business as well as years of experience to trading.
All that can make them very effective, but also very costly. Often they will charge not only
a brokerage fee, which is an up-front fee for their services, but often they take a percentage
of any earnings. They may also have other fees added into the exchange, depending on the
stockbroker. Online brokerage firms charge flat rates for each transaction, which are
usually extremely inexpensive by comparison. The second benefit of online stock trading
is that you have full control. This was always one of the biggest complaints when brokers
held a stranglehold on the market.
They would often refuse to perform a trade they thought was a poor investment. If they
saw any flaws in an investment, they had full authority to deny the trade to their clients.
While this could save the potential client from making a bad investment, it could also
prevent them from taking a risk that would pay off enormously. Online stock trading
removes the middleman between traders and the stocks they want.The third benefit of

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 14

online stock trading is immediacy. Using the daisy chain of investor to broker to trade to
payoff was sometimes too time consuming to execute the trade in time, which is a danger
in the world of stocks where time is money and seconds count. Trading online allows
immediate trading for the investor and real-time updates regarding a stock’s performance.
The lag between the investor's purchase and the actual time the stocks are bought has been
reduced to nil. The fourth benefit of online stock trading is being able to make as many or
as few trades as you desire. Brokers usually required a minimum trade allotment, which
meant that an individual could not make a single trade for a paltry sum. They were forced
to adhere to the broker’s guidelines. This prevented casual traders from being able to trade
whatever volume of investments they wanted. The stock market has come a long way from
the archaic days of faceless men in pinstripe suits making deals in boardrooms that toyed
with the finances of the entire country, if not the world. Now it is just as easy for anyone
to trade online while sitting in the comfort of his or her own home. The benefit of online
stock trading is that it wrests control of the market from the brokers and puts it, along with
his or her financial future, into the hands of the individual.

The Disadvantages of Online Trading

Online trading is fast and inexpensive. You can place trades from the convenience of your
home without ever having to speak to a live agent. However, the speed and efficiency of
online trading platforms depend entirely on the supporting technology infrastructure,
which could malfunction at critical moments. Other potential areas of concern include
customer service and feedback for investment decisions.
Technical Problems
Online trading platform are only as good as the underlying servers and software. High
volumes on volatile trading days can slow processing speeds and information flow. You
could incur substantial losses if you couldn't place the required buy and sell orders,
especially in fast-moving markets. Software bugs can lead to delays in getting price quotes
and information on order status. This also could result in trading losses, because you might
enter orders based on incorrect price quotes or delayed order-execution reports. Investors
depend on Internet and cellular service providers for researching information and placing
trades. If these Internet access points malfunctioned, you would not be able to receive
timely information or place critical trades.
Customer Service
Online brokers have a lean cost structure, which allows them to offer discounts on
commissions. You might have to wait a long time to place a phone trade, especially during
volatile markets, because trained and certified traders cost money. You might need to place
certain trades over the phone if your online portal malfunctions or your Internet connection
is down. In addition, you might not be able to place certain types of orders over the phone,
such as spread orders involving options. Brokers might assign priority to high-net-worth
clients and active traders, which could lengthen wait times for average investors.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 15

Feedback Mechanisms
Online trading means that you are your own investment manager, but this independence
comes at a price. You do not have the benefit of a professional feedback loop, such as a
reliable sounding board for your investment decisions. Online brokers typically do not
provide buy-sell recommendations. You have to set aside time for research, such as
reviewing financial statements on corporate investor relations websites and price charts on
financial websites. You should consider mutual funds, which offer professional
management and diversification at a reasonable cost, if you do not have the time for
adequate due diligence.
Considerations
You should have a backup Internet connection at your workplace or at a public library in
case your service provider is experiencing problems. Do not call a discount broker during
regular hours for administrative actions, such as transferring positions between accounts.
Avoid placing market orders in fast- moving markets, because these orders could be filled
at unfavorable prices. Review publicly available information on different brokers,
including comments on service levels and features, before opening an online account.

Strategies of Online trading

When people use the term "day trading", they mean the act of buying and selling a stock
within the same day. Day traders seek to make profits by leveraging large amounts of
capital to take advantage of small price movements in highly liquid stocks or indexes. Here
we look at some common day trading strategies that can be used by retail traders.
EntryStrategies
Certain stocks are ideal candidates for day trading. A typical day trader looks or two things
in a stock: liquidity and volatility. Liquidity allows you to enter and exit a stock at a good
price. Volatility is simply a measure of the expected daily price range - the range in which
a day trader operates. Once you know what kinds of stocks you are looking for, you need
to learn how to identify possible entry points.
There are three tools you can use to do this:
• Intraday Candlestick Charts - Candles provide a raw analysis of price action.
• Level II Quotes/ECN - Level II and ECN provide a look at orders as they happen.• Real-
Time News Service - News moves stocks. This tells you when news comes out. We will
look at the intraday candlestick charts and focus on the following three factors:
• Candlestick Patterns - Engulfing and dojis
• Technical Analysis - Trend lines and triangles
• Volume - Increasing or decreasing volume.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 16

There are many candlestick setups that we can look for to find an entry point. If properly
used, the doji reversal pattern Finding a target Identifying a price target will depend largely
on your trading style. Here is a brief overview of some common day trading strategies.

Strategy Description
Scalping
Scalping is one of the most popular strategies, which involves selling almost immediately
after a trade becomes profitable. Here the price target is obviously just after profitability is
attained.
Fading
Fading involves shorting stocks after rapid moves upwards. This is based on the
assumption that
(1) they are overbought
(2) early buyers are ready to begin taking profits
(3) existing buyers may be scared out.
Although risky, this strategy can be extremely rewarding. Here the price target is when
buyers begin stepping in again.
Daily Pivots
This strategy involves profiting from a stock\'s daily volatility. This is done by attempting
to buy at the low of the day (LOD) and sell at the high of the day (HOD). Here the price
target is simply at the next sign of a reversal, using the same patterns as above.
Determining a Stop-Loss
When you trade on margin, you are far more vulnerable to sharp price movements than
regular traders. Therefore, using stop-losses is crucial when day trading. One strategy is to
set two stop losses:
1. A physical stop-loss order placed at a certain price level that suits your risk tolerance.
Essentially, this is the most you want to lose.
2. A mental stop-loss set at the point where your entry criteria are violated.
This means that if the trade makes an unexpected turn, you'll immediately exit your
position. Retail day traders usually also have another rule: set a maximum loss per day that
you can afford (both financially and mentally) to withstand. Whenever you hit this point,
take the rest of the day off. Inexperienced traders often feel the need to make up losses
before the day is over and end up taking unnecessary risks as a result.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 17

Evaluating and Tweaking Performance. Many people get into day trading expecting to
make triple digit returns every year with minimal effort. In reality, many day traders lose
money. However, by using a well-defined strategy that you are comfortable trading, you
can improve your chances of beating the odds. How do you evaluate performance? Most
day traders evaluate performance not so much by a percentage of gain or loss, but rather
by how closely they adhere to their individual strategies. In fact, it is far more important to
follow your strategy closely than to try to chase profits. By keeping this mindset, you make
it easier to identify where problems exist and how to solve them.
The Bottom Line
Day trading is a difficult skill to master. As a result, many of those who try it fail. But the
techniques described above can help you create a profitable strategy and, with enough
practice and consistent performance evaluation, you can greatly improve your chances of
beating the odds.
Online intellectual property theft
You have intellectual property rights to any material you’ve created. This means you own
exclusive rights to use, publish or sell that material. But when this material is in electronic
form on the Internet, it could easily be copied and used without your permission. Text,
images and multimedia you’ve created for your own website could turn up on someone
else’s site, for example. Or perhaps that software program you wrote gets illegally copied
and distributed for free when you intended to sell it. Whenever your intellectual property
is stolen via the Internet, you’re a victim of online intellectual property theft.
Identity theft
It’s easy to store and access personal information on the Internet. Unfortunately, that means
it’s also easy for people to obtain this information illegally. This is identity theft. Stolen
details such as names, addresses, birth dates, and account or card numbers all build up an
identity that can be used to commit fraud. Because online trading isn’t face-to-face, it’s
easy for someone to hide behind a stolen identity and make fraudulent purchases or
requests.
Phishing
Any email or website that requests private information such as credit card numbers,
account numbers or passwords may be an attempt at ‘phishing’. Any information you send
to a phisher may be used unlawfully. Even if the request looks genuine, it is still sensible
to make independent checks on its validity. For example, if you receive an email from a
bank asking to confirm an account number, don’t reply immediately. Ring your bank to
confirm the request, and don’t use any phone numbers included in the email - they could
be fake.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 18

Pagejacking
If you click on a link and find yourself at an unexpected website, you may have been ‘page
jacked’. This happens when someone steals part of a real website and uses it in a fake site.
If they use enough of the real site, Internet search engines can be tricked into listing the
fake site and people will visit it accidentally. The fake site could contain unwanted or
offensive material. As an online merchant trading via a website, you need to know that
your site isn’t being stolen in this way. Unfortunately you can’t prevent pagejacking; you
can only deal with it after you know it’s a problem.

Advance fee scams

An advance fee scam is fairly easy to identify – you will be asked for money or goods
upfront in return for giving you credit or money later. These advance fee scams can seem
convincing and have taken in many people. One example of an advance fee scam plays out
in online auctions. If a buyer sends you a check for much more than you asked, be
suspicious. If you accept the check and refund the extra money to the buyer, you may find
out later that the check was bad and that you’ve lost the whole amount.

Bad check scams

Always be wary of unusually large orders, even when the customer is paying in advance
by wire transfer (an extremely safe method of payment when performed bank-to-bank).
Though the transaction could be perfectly legitimate, pay attention if the customer asks for
your bank’s address or suddenly asks to pay by check instead of by transfer. In both cases,
the customer may be about to pull a bad check scam. Both scenarios allow the customer to
deposit money into your account by check. If the check is a clever fake and you accept it
as payment, you lose both the money and the merchandise.
Fake money orders
Usually a money order is one of the safest ways to receive payment. The amount is prepaid
by the customer, and a bank passes the amount on to the merchant. Because the money is
handled via a third party and can be transferred internationally, many online transactions
are made using money orders. They’re difficult to counterfeit, but be especially cautious
of money orders from high-risk areas such as Asia, Africa, Eastern Europe, the Middle East
or Russia, as counterfeit money orders from these areas are unfortunately becoming more
common. Wire transfer fraud. As long as you avoid transfers via cash offices and stick to
transfers performed bank-to-bank, wire transfer is a very safe way to move money around.
This doesn’t apply if you’re asked to accept money and then pass it on to someone else via
wire transfer. If that happens, be suspicious, especially if you’re asked to do this by anyone
you don’t know well.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 19

 Online Trading Scams
How online trading scams work.
Fake websites
It’s surprisingly easy to set up a real-looking website. To help draw you in, scammers often
use names and website addresses that are similar to those of genuine retailers. For added
credibility, they sometimes advertise in genuine online directories and on social
networking sites. Or they may pay to be in search engines' featured listings. Fake business
pages on social media sites like facebook can also be used to draw people into scams.
Asking for more money. Some scammers advertise fake products then ask for even more
money after you've paid. They claim to need extra payments for things like shipping, taxes
and insurance. As the original price seemed so low, you could be tempted to send the extra
money. Don't. They'll keep coming up with reasons why they need more money. And for
goods that didn't exist in the first place. Scammers on genuine auction websites. Reputable
auction sites have systems to spot scams. So scammers will often try to take you away from
auction sites to do a deal. Be wary if anyone asks you fora private sale. Whether that's for
one of their listings or something that you've listed. Sending too much money. Alarm bells
should also ring if the person who wins your auction sends you too much money when it
comes to pay. This is a type of Upfront Payment scam. The scammer will claim that they
have made a mistake. They will ask you to send them a refund. Or they may ask you to
forward money onto somebody else. Either way, you'll find that their transaction is reversed
and you end up minus funds.
Penny auction websites
Penny auctions are a twist on online auctions. In a penny auction you pay to take part. Each
bid increases the price by one or two cents so, in theory, you can buy sought after goods
like iPads and digital cameras for a fraction of their retail price. But there's a catch. You
may agree to hefty membership fees without realising. Some penny auction sites start
deducting fees once they have your credit card details.
Fake tickets
Scammers take advantage of major events like rugby games and music gigs. It's safer to
buy tickets from authorised ticketing outlets.

Fraud and Risk Management

A risk management tool that is superior by design and provides tailored fraud protection.
•We can make your business more profitable. Our products help decrease fraud and
increase good transactions.
•We offer peace of mind: our background in card processing and alternative payment
methods help you make better decisions. Risk Guardian can make your business more
profitable. RiskGuardian is designed to reduce the costly impact of fraud. It offers more

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 20

accurate risk checks so that it can increase the acceptance of good transactions and
minimize fraudulent ones. Tailored to fit your needs. We worked with our customers to
create a fraud tool that is tailored to the needs of your sector. Once set up, Risk Guardian
can be customized even further to match your business requirements. We are your
dedicated fraud partner. We are a partner, advisor and expert in payments and fraud
management.
We will work with you to optimise your fraud settings according to your sector and
business. Better data means better decisions. At World pay, we see billions of transactions
annually. Our background in card processing and alternative payment methods can be
combined with our sector specific risk management experience to help you make better
decisions. Payments are not just about cards.
The payment landscape is rapidly changing. It is estimated that by 2017, 59% of all online
transactions will be made using non-card payment methods.
Protect yourself from online trading scams.
• Before buying online, it's a good idea to do your homework. Type in the company's name,
followed by the word 'scam'. If the website is fake, you may uncover stories from people
who've been caught out by the same scam.
• Remember that comments about a company or product that seem too good to be true may
be just that. It's very easy for scammer to write their own glowing reviews.
• It's safer to pay by credit card than doing a bank transfer. If things go wrong, you may be
able to get a chargeback. Be especially wary of sites that ask you to pay using a money
wiring service such as Western Union.
• Check that payment pages look secure. Look for a padlock symbol and make sure the
website address begins with ‘https’ (the 's' stands for secure).
• Always check out traders' contact details. Be on your guard if they only give you an email
address or mobile number. If they provide a landline number, ring it. If you can't get
through, or you're diverted to somebody in an overseas call center, it may be a scam. Also
be wary if the only address they give is a PO Box number.
• Always read terms and conditions attached to any offer. Look for hidden costs and
obligations. Don't trust offers that don't allow you to read the terms and conditions.
• When trading on auction sites take into account the ratings given to buyers and sellers.
• Resist suggestions to go outside the auction process to complete the sale.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 21

 FOREIGN CURRENCY TRADING
Foreign Exchange Currency Fraud: CFTC/NASAA Investor Alert.
BEWARE OF FOREIGN CURRENCY TRADING FRAUDS.
The advertisements seem too good to pass up. They tout high returns coupled with low
risks from investments in foreign currency (forex) contracts. Sometimes they even offer
lucrative employment opportunities in forex trading. Do these deals sound too good to be
true? Unfortunately, they are, and investors need to be on guard against these scams. They
may look like anew sophisticated form of investment opportunity, but in reality they are
the same old trap—financial fraud in fancy garb. Forex trading can be legitimate for
governments and large institutional.
Investor’s concerned about fluctuations in international exchange rates, and it can even be
appropriate for some individual investors. But the average investor should be wary when
it comes to forex offers. The Commodity Futures Trading Commission (CFTC) and the
North American Securities Administrators Association (NASAA) warn that off-exchange
forex trading by retail investors is at best extremely risky, and at worst, outright fraud
.FOREX CONTRACTS Forex contracts involve the right to buy or sell a certain amount
of a foreign currency at a fixed price in U.S. dollars. Profits or losses accrue as the exchange
rate of that currency fluctuates on the open market. It is extremely rare that individual
traders actually see the foreign currency. Instead, they typically close out their buy or sell
commitments and calculate net gains or losses based on price changes in that currency
relative to the dollar over time. Forex markets are among the most active markets in the
world in terms of dollar volume. The participants include large banks, multinational
corporations, governments, and speculators. Individual traders comprise every small part
of this market. Because of the volatility in the price of foreign currency, losses can accrue
very rapidly, wiping out an investor’s down payment in short order.
SCAMS WORK
Forex scams attract customers with sophisticated-sounding offers placed in newspaper
advertisements, radio promotions, or on Internet sites. Promoters often lure investors with
the concept of leverage: the right to “control” a large amount of foreign currency with an
initial payment representing only a fraction of the total cost. Coupled with predictions
about supposedly inevitable increases in currency prices, these contracts are said to offer
huge returns over a short time, with little or no downside risk. In a typical case, investors
may be assured of reaping tens of thousands of dollars in just a few weeks or months, with
an initial investment of only $5,000. Often, the investor’s money is never actually placed
in the market through a legitimate dealer, but simply diverted—stolen— for the personal
benefit of the con artists.
REGULATORS DOING
The CFTC is the Federal agency with the primary responsibility for overseeing the
commodities markets, including foreign currency trading. Many state securities regulators

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 22

also have the right under their state laws to take action against illegal commodities
investments. Sometimes the CFTC and the states work together on cases.
Examples include: In 2005, the CFTC and the Commissioner of Corporations of the State
of California sued National Investment Consultants, Inc., and others in U.S. District Court
for the Northern District of California for engaging in a forex scam involving
approximately $2 million in customer funds. In 2006, the Court ordered restitution and
fines amounting to $3.4 million. Also in 2005, the CFTC and the Texas State Securities
Board (TSSB) engaged in a cooperative enforcement effort against Premium Income Corp.
(PIC) and its principals. The CFTC and Securities and Exchange Commission (SEC) filed
an action in U.S. District Court for the Northern District of Texas and the TSSB filed an
administrative action charging PIC and its principals with engaging in an illegal $11
million forex operation. To date, the federal court has found three corporate defendants
liable to pay restitution of $12 million and each was assessed a fine of $37 million. The
State of Texas also has obtained cease and desist orders along with various criminal
indictments and convictions. PIC’s president is currently incarcerated on charges stemming
from his forex scam.
In 2004, Gregory Blake Baldwin of Utah pleaded guilty to fraud after his firm, Sunstar
Funding, accepted $228,500 from 33 investors for placement into the foreign currency
market. In 2003, the CFTC and the State of Oregon Department of Consumer and Business
Services sued Orion International, Inc., and its principals in U.S.Online trading Page
40District Court for the District of Oregon for fraudulently soliciting over $40million to
participate in a purported forex fund. Orion, and its president Russell Cline,
misappropriated virtually all the customer funds. In 2006, the Court entered fines and
restitution orders against the defendants totaling almost $150million. Cline is currently
incarcerated on charges stemming from his forex scam. In 2002, the CFTC, the SEC and
the State of Utah filed an action against accompany known as “4NExchange” for violations
of state and Federal laws as the firm’s principals illegally offered foreign currency contracts
through an alleged Ponzi scheme that cost investors nearly $15 million.

WARNING SIGNS OF FRAUD

If you are solicited by a company that claims to trade foreign currencies and asks you to
invest funds, you should be very careful. Watch out for the following warning signs:
1. Be wary of promises that sound too good to be true: “You can make six figure profits
within a year; forex investments are very low risk; You can double your money.” Get-rich-
quick schemes, including those involving foreign currency trading, tend to be frauds.
2. Be skeptical about unsolicited phone calls offering investments, especially those from
out-of-state salespersons or companies that are unfamiliar.
3. Be especially cautious if you have acquired a large sum of cash recently and are looking
for an investment vehicle. In particular, retirees with access to their retirement funds may

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 23

be attractive targets for fraudulent operators. Getting your money back once it is gone can
be difficult or impossible.
4. Be wary of high-pressure efforts to convince you to send or transfer cash immediately
to the firm, via overnight delivery or the Internet.5. Be smart about the money you do put
at risk. Even when purchased through the most reputable dealer, forex investments are
extremely risky. If you are tempted to invest, make sure you understand these products and
above all, only invest what you can afford to lose. Don’t invest your rent money in a forex
contract. Internet Fraud Precautions Internet is the most common medium use for online
business, sharing information, etc... but unfortunately, Internet Fraud arises very frequently
and there are varieties of internet frauds few of them are highlighted below: Online
Auction: It is safer to purchase from a seller based in the same country than from one
abroad because of the differences in the law from country to country. Check the feedbacks
of the sellers and perform a background check. Non-Delivered Goods: Always purchase
goods from reputable business partner and make sure they legally exist. Use your own
diligence by searching their company name along with the word "fraud", "scam" or “rip-
off” on search engines to see any registered complaints about a company. Do your research
before purchasing goods because the genuine sellers will always give you as much as
information as they can about the goods. Fake Website: A fake website can be produced in
less than an hour by a professional webmaster or con artist. To good to be true: Watch out
if anyone offers you unrealistic prices, especially if the offers are from Nigeria. Information
stolen: Avoid posting your personal information on social networking sites like Twitter,
Orkut etc... Always keep yourself up-to-date on search engines to view that your profile
has not been used by someone on any website.
Security Concerns
As when performing any financial transaction online, trading stocks online can pose
security risks. Despite the security precautions taken by online trading sites, there is no
guarantee that a hacker won't finds his way into your account and steal your vital and
sensitive financial information. If your online trading account is large, you are at risk to
lose a serious amount of money. Make sure that you choose a unique account password
and change it frequently.
Technical Difficulties
Technical difficulties with the site can delay a transaction, resulting in unintended and
undesired consequences. You may have purchased a stock atone price, but a system failure
may have negated the transaction. By the time things are up and running again, the stock
price may have increased. As a result, you could end up paying more for the stock than you
intended. When seeking an online broker, check into what safeguards it offers to protect
you if this type of incident occurs. After-Hours Blues Online trading often occurs after the
stock market has closed for the day. Traders perform transactions by using electronic
communications networks (ECNs) on which buyers and sellers are matched via computer
systems. Possible drawbacks to trading after hours can include increased price volatility,

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 24

reduced ability to act upon current quotes and more competition with professional traders.
Liquidity can also be an issue, as you may not be able to convert your stocks to cash quickly
if the need arises.
Too Much Chatter
Online trading fosters the creation of online chat rooms and forums where people can
"meet" and share information. Unfortunately, these meeting place scan be a breeding
ground for rumor, misinformation and even the spreading of false stock tips. It is important
to research any information you pick up from chat rooms or forums before taking action
based on a recommendation from a "Chatty Cathy." It may even be wise to ignore what
you read in these spots completely.
09 Tips For Choosing An Online Broker
One of the most important investment decisions you'll make has nothing to do with stocks,
bonds or mutual funds. This crucial decision is picking a broker. There are dozens of
companies offering brokerage services on the internet, and many of them are just as good
or better than traditional, brick-and-mortar businesses, but how to decide which one is best
for you? Discount is not always a good deal. Consider starting out with a full-service
broker. They are often best for novice investors who may still need to build confidence and
knowledge of the markets. As you become a more sophisticated investor, you can graduate
into investing more of your money yourself. (For more insight, see Full-Service Broker Or
DIY?)
1. Availability is key. Try hitting the company's website at different times throughout the
day, especially during peak trading hours. Watch how fast their site loads and check some
of the links to ensure there are no technical difficulties.
2. Alternative trading provides flexibility. Although we all love the net, we can't always be
at our computers. Check to see what other options the firm offers for placing trades. Other
alternatives may include touch-tone telephone trades, fax ordering, or doing it the low-tech
way - talking to a broker over the phone. Word to the wise: make sure you take note of the
prices for these alternatives; they will often differ from an online trade.
3. The broker's background matters. What are others saying about the brokerage? Just as
you should do your research before buying a stock, you should find out as much as possible
about your broker.
4. Price isn't everything. Remember the saying "you get what you pay for"? As with
anything you buy, the price may be indicative of the quality. Don't open an account with a
broker simply because it offers the lowest commission cost. Advertised rates for companies
vary between zero and $40 per trade, with the average around $20. There may be fine print
in the ad specifying which services the advertised rate will actually entitle you to. In most
cases, there will be higher fees for limit orders, options and those trades over the phone
with your broker. You might find that the advertised commission rate may not apply to the
type of trade you want to execute.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 25

5. Minimum deposits may not be minimal. See how much of an initial deposit the firm
requires for opening an account. Beware of high minimum balances: some companies
require as much as $10,000 to start. This might be fine for some investors, but not others.
6. Product selection is important. When choosing a brokerage, most people are probably
thinking primarily about buying stocks. Remember there are also many investment
alternatives that aren't necessarily offered by every company. This includes CDs, municipal
bonds, futures, options and even gold/silver certificates. Many brokerages also offer other
financial services, such as checking accounts and credit cards.
7. Customer service counts. There is nothing more exasperating than sitting on hold for 20
minutes waiting to get help. Before you open an account, call the company's help desk with
a fake question to test how long it takes to get a response.
8. Return on cash is money in the bank. You are likely to always have some cash in your
brokerage account. Some brokerages will offer 3-5%interest on this money, while others
won't offer you a dime. Phone or email the brokerage to find out what it offers. In fact, this
is a good question to ask while you're testing its customer service!
9. Extras can make a difference. Be on the lookout for extra goodies offered by brokerages
to people thinking of opening an account.

Don't base your decision entirely on the $100 in free trades, but do keep this in mind.

1.) Not all stock breakouts are created equal. While the best will zoom 20-30%higher (or
more) before taking a rest, others quickly fail and fall back down below the breakout level.
For maximum odds of a successful breakout, you need a checklist to make sure you’re not
overlooking a key technical point.
2.) How To Trail Stops On Winning Swing Trades For Maximum Profit, One of the most
challenging aspects of swing trading is knowing when to exit a trade...specifically a
winning trade. Locking in your trading profits too soon (due to fear of a reversal) has a
very high opportunity cost and can make it difficult to be a consistently winning trader over
the long-term. Conversely, being greedy by trying to squeeze every point out of the trade
before selling is a surefire way to give back a substantial amount of unrealized gains. The
answer to this dilemma is scaling out of a trade by trailing stops higher along the way.
3.) How To Trade Around Earnings Reports With Maximum Profits And Low Risk. When
public companies report their quarterly earnings four times a year, many traders are unsure
whether to exit their positions ahead of the expected earnings release date or to simply
continue holding onto their trades. Closing out a trade ahead of earnings can prevent the
realization of large gains that come with positive reactions to earnings reports, but it also
eliminates the risk of getting nailed if a stock drops due to a negative reaction.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 26

4.) How To Find The Best Stocks To Buy BEFORE They Breakout The best breakout
stocks always emerge from a valid base of consolidation that consists of one of two types:
cup and handle or flat base.
5.) How Monstrous Volume Powered This Breakout Stock To Our 37%GainVolume is one
the most powerful, albeit basic, technical indicators at a trader’s disposal. Yet, many newer
traders underestimate the effectiveness and efficiency of identifying volume surges that
point to buying among banks, mutual funds, hedge funds, and other institutions. Earlier
this year, we bought and sold Bitauto ($BITA) for a 37% share price gain, and volume was
one of the key factors that told us to hang on to this stock.
6.) How Top Stock Traders Mentally Deal With Sudden Market Reversals Regardless of
how much we plan and prepare each new trade entry, things don’t always work out as
anticipated (otherwise we would all be gazillionaires). As such, it is crucial to always have
a game plan for how to emotionally and physically handle unexpected changes in a stock’s
price action.
7.) How We Traded The Breakout In Silica Stock For A 43% Gain($SLCA)After buying
and holding shares of US Silica ($SLCA) for three months, we sold the stock in October
for an average share price gain of 43%.Using six annotated stock charts, we walk you
through the anatomy of a successful breakout trade.
8.) How To Buy The Best Breakout Stocks On A Pullback In a healthy bull market (all of
2013), a majority of the stocks and ETFs we buy are momentum-based breakout trades.
However, when leading stocks are breaking out like mad, it’s easy to miss the occasional
breakout that you were stalking for potential buy entry. When this happens, there is no need
to feel you’ve missed out on the opportunity. Simply buy the first short-term pullback
instead.
9.) 4 Winning Tips For Profitable ETF Trading. In our nightly swing trading newsletter,
we trade both individual stocks and ETFs, the ratio of which is dependent on market
conditions. After locking in a 44% gain on shares of Guggenheim Solar ETF ($TAN)
earlier this year, we detailed 4 specific tips that helped us identify this ETF as a great trade
candidate.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 27

 Online Trading - Global Scenario
Online trading has become very popular in the last couple of years because of the
convenience of case and use. Numerous companies have gone online to meet their
customers demands, enabling them to trade when they want and how they want to. Trading
has existed for as long as we can remember and when we talk about it. We are referring to
trade as in financial dealings. Trading is the buying and selling of goods and services, but
in the current context, it is the buying and selling of financial services, including securities,
through the World Wide Web. According to Dixcart Online (one of the online brokerage
firms) "Internet will rapidly become the normal way to purchase many goods and services
in the future" Online trading has basically replaced a phone call with the Internet. Instead
of interacting with brokers over the phone, the customer is clicking the mouse, not to
mention that other options are still available, but at a cost. Online trading has given
customers real-time access to account information, stock quotes. Elaborate market research
and interactive trading. Further online trading has let to additional features such as:
• Limit/stop orders- orders that can go unfilled, but there is an extra charge for this layaway
facility since one needs to hold a price.
• Market orders-orders can be filed at unexpected prices, but this type is much more risky,
since you have to buy stock at the given price.
• Cash account-where funds have to be available prior to placing the order and margin
account.
• Margin account - where orders can be placed against stocks, to increase purchasing
power. With all this in mind we need to see the advantage and disadvantages associated
with online trading.

Online Trading in India.

India ranks amongst the top 10 countries in terms of the market capitalization of its sick
market. India is gradually opening its stocks market to foreign investors. A beginning was
made on 27 January 2000, when the Chairman of the Securities and Exchange Board of
India (SEBI) authorized stock exchanges to provide Internet-based trading services to
investors and also announced that foreign companies and individuals could now trade on
Indian stock exchanges. SEBI is also planning to permit online filing by listed companies
and facilitate the retrieval of this data by investor from WEBSITES created by stock
exchanges. It has also decided that the IPOs) for which draft prospectus had been filed with
SEBI. as on February 2000. And comments not yet received, and all future IPOs will be
traded compulsory in De mat form for all investors. The investors, however, will continue
to have the option of holding securities upon allotment either in physical form or in
dematerialized form according to the provisions of the Depositories Act. SEBI also
introduced on 10 January 2000, the rolling settlement cycle, which permits settlement on
T + 5, that is 5 business days from the date of the transaction. By May 2000, over 161
companies were on this system.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 28

SEBI has introduces these measures to make Indian stock exchanges transparent and
investor friendly. The Indian stock market has the potential of the becoming one of the
most active in the world primarily on account of its retail investor base, listed and traded
companies, if an efficient and inexpensive infrastructure is made available.

Exhibit - 1 Internet users in India by age 15-34 Years

Source: Introduction to online stock market trading (Dr. Kamalesh N. Agarwala)

According to MBL Research and Consultancy Group. India's citizen’s population is
projected at 2.5 million users by middle of 2000 and 4.5 million by year-end. 85% of these
users are concentrated in eight cities. The gender breakdown is 72 percent of the users are
male, 28 percent female. According to an analysis by ’eMarker’ the growth rate predicated
in their study is higher than any earlier studies. For example, both India's department of
Telecommunications and the National Association of Software and Services Companies
(NASSCOM) forecast 1.5 million users for 2000. NASCOM estimated 1,30,000 in 1998.

Credit Lyonnais securities Asia is very Bullish on the Internet scenario in India. In February
2000, a study conducted by them found that:
• India will have more internet users by 2004 than any other Asian country, except China,
if prices of computers drop and internet access Via cable television becomes possible.
• Internet use in the country will expand at the fastest place in Asia, boosting the number
of people online 11-fold to 30 million by 2004, second only by china.
• India has about 3.5 million to 4 million computers and 22 million fixed telephone lines
as compared with 41 million television sets and 25 million cable connections.
• A host of companies have set up WEBSITE in the past two years. Only 1 percent of the
nearly 800 million WEBSITEs cater to an Indian audience. Credit Lyonnais estimates are
nearly double those of market research firm International Data Corp. IDC predicts that

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 29

India may have 17 million Internet users by 2004. According to the Credit Lyonnasis
report, IDC forecasts 34 million users in china by 2004.
India enters the cyber-trading era to equal the current market trends taking into
consideration the need to facilitate inflow of funds in the capital market. The trading system
will enable all categories of investors, resident and non-resident Indian, to trade online.
Maybe right now the rules are not yet clearly defined but the opportunities, if offers are
extremely promising.

National Stock Exchange

NSE Online Trading System NSE's (National Stock Exchange) trading system is known as
NEAT (National Exchange for Automated Trading). It is a fully automated screen-based
trading system, which enables brokers and trading members around India to trade
simultaneously. NEAT has replaced the 'ring' and brokers no longer congregate on the floor
of the exchange trade. An investor is thus able to buy or sell securities through the brokers
connected to NEAT network. The trading software selected by NSE is in use by several
exchanges around the world. The telecommunications network is the backbone of its
trading system designed to provide continuous availability to the brokers. It is one of the
largest interactive VSAT (Very Small Aperture Terminals) based stock exchanges in the
world. Broker- to -broker is through online terminals. The terminals of the brokers on the
wholesale debt market are linked to the central computer. The brokers on the capital market
trade through a satellite network that is owned, operated and managed by NSE using VSAT
(Very Small Aperture Terminals) technology.

BSE Online Trading System ‘Bolt’

Bombay stock exchange (BSE) switched over from the open outcry trading system to a
fully automated computerized mode of trading known as BSE online Trading (BOLT)
system in 1995. This system which is both order and quote driven was commissioned on
14 March 1995 and in May 1995 it was introduced for all the securities listed on BSE. It
started with screen based trading and in September 1997, switched over to direct online
access facility. In the initial stage. BOLT was available to brokers of BSE based in Mumbai
through leased lines.

Trading
The scrip's traded on the BSE have been classified into "A“,“B1,"B2,"C",‘F" and Z group.
The scrip's listed on the BSE under "A","Bl"and B2 groups represent the equity segments.
The ‘C' group covers the odd lot securities in ‘AyBlLand B2 groups and rights

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 30

renunciations. The 'F' group represent s the debt market (fixed income securities) segment.
The 'Z' group comprises shares of delisted companies. The BSE is currently the only stock
exchange in the country that provides on-line trading in odd lot securities and rights
renunciations. Trading in this segment covers all the scrip's listed in the equity segment.
This facility of trading in odd lots of securities and rights renunciations offers investors an
exit route to dispose of their odd lots and consolidate their securities into marketable lots.
The trading cycle for all these groups of securities is weekly. The trading cycle for ’A'.
B1.'B2 and C group securities representing the physical segment is from Monday to Friday
and that for "F“ group securities is from Thursday to Wednesday. The transaction in 'A'
group scrip's are allowed to be carried forward from one settlement to another settlement,
subject to a maximum of 75 days from the date of original transaction. The trading session
for carry forward of transactions from one settlement to another is conducted on Saturdays,
i.e. at the end of every trading cycle in the physical segment. Trading on the BOLT system
is conducted from Monday to Friday between 10.00 a.m. and 3.30 p.m. while the carry
forward session for ‘A" group securities is conducted on Saturdays between 10.00 a.m. and
12.30.p.m. 61 BSE's information systems department generated the following statements,
which can be downloaded by the brokers as daily basis.
• Transactions
• Details of margins payable in respect of the trades.

Settlement and Clearing

Settlement and pay-out for A, B1, B2 and C Group of Securities. Payment of money and
delivery of securities settle the trades done by the brokers during the weekly trading from
Monday to Friday in the following week. All deliveries of securities are required to be
routed through the clearing house, expect for certain off-market transaction, which
although are required to be reported to the exchange, may be directly between the brokers
concerned. BSE's information systems department nets off all deliverable trades (purchases
and sales in each scrip) done by a broker during a settlement and generations the following
statements.
• Delivery orders
• Money statements Delivery / receive orders The delivery orders provide information like
script, quantity and the name of the receiving broker to whom the securities are to be
delivered through the clearing house
MONEY STATEMENTS
The money statements provides details of payments/receipts for the settlement 62 With
effects from 22 December 1997, the bank accounts of brokers maintained with Bank of
India, BSE branch, the only clearing bank at the time, were directly debited through
computerized posting on the pay-in-day for their settlement dues. The list of clearing banks

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 31

has since been expanded to include HDFC bank Ltd., Global Trust Bank Ltd., and Standard
Chartered Bank. The securities, as per delivery orders issued by the BSE, are to be
delivered in the clearing house on the day designated for pay-in, i.e on Wednesday and
Thursday as per prescribed time slots up to 1.00 p.m. No late delivery of shares is permitted.
Brokers have to deliver the securities in special closed pouches issued by the BSE along
with the relevant details (distinctive numbers, scrip code, quantity, receiving brokers) on a
floppy. The data submitted by the brokers on floppies is matched against the master file
data on the clearing house computer systems. If there are no discrepancies, then a scroll
number is generated and a scroll slip is issued. The brokers then submit the securities at
the receiving counter. The clearing house personnel arrange and tally the securities
received against the receiving broker-wise report generated on the pay-in positions are
debited on Thursday. The procedure is called pay-in. The receiving brokers collect
securities on Friday and the accounts of the brokers having pay-out.
ELECTRONIC DATA INTERCHANGE
Interchange EDI forms the backbone of communication of online trading operations. EDI
Provides a proprietary secure network for the transfer of data and information between the
following entities associated with the online Trading.
• Brokers and Their Associates(Sub-Brokers)
• Depository/NSDL and the stock exchange
What Is EDI?
EDI is the exchange of structured business information between applications, among
trading partners (business organizations who agree to exchange business documents via
EDI) by agreed message standards through electronic means. It is the application-to-
application transmissions of business information and documents, such as purchase orders,
invoices. In EDI information in organised according to a specified format set by both
parties, allowing a hands off computer transaction that requires no human intervention or
r-entry of data on either end. The information contained in an EDI transaction set is, from
the most part, the same as that on a conventionally printed document. EDI is about
relationships among companies. Though EDI, companies get the opportunity to co-ordinate
their internal applications so the information stream flows smoothly between them. By
itself, EDI does not create any new processes or strategies, it simply expedites the existing
business processes. EDI compresses the timeline from initial order to shipment to final
payment by sending actionable information without the need for reentry of
information/data at any stage along the way. EDI is completely different from sending
electronic mail messages or sharing files through a network, a modem, or a bulletin board.
The straight transfer of computer files requires that the business applications,. The sender
must use a business application that creates a file format identical to receiver's business
application. EDI does not require the trading partners to have identical business application
or document processing systems

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 32

EDI has three major components:
• Trading partners
• Communication
• Translation software

Advantages of Online Trading

Online trading has made it possible for anyone to have easy and efficient access to more
reports and charts that it was previously possible if one went to any discount brokers office.
Thus, we have access to a lot more information online to self ourselves.

• Online trading has left room for smaller organizations to compete with multinational
organizations since size is no longer a legit issue, Being online does not identify the size
of any particular organization therefore this gives additional power to the undergoes.
• Online trading has allowed companies to locate themselves where they want, as 'physical
location' is not an issue anymore. Companies can establish themselves according to their
gains and losses, for instance where tax (sales and value added taxes) are best suited to
them.
• Online trading gives control to individuals and they can exercise it over their accounts
thus comprehend what is going on when they trade. It is like going back to school and re-
educating oneself on how to trade online.
• Individuals benefit by saving comparatively a lot mare when trading online as the cost
per trade is less.
• Individuals can invest in a variety of products, unlike earlier when people bought bonds,
mutua Dear Respondent, I am Ramya.K, Research Scholar, pursuing a study in the broad area of
behavioural finance for my Ph.D thesis. This questionnaire shall take about 15 to 20 minutes to
answer. All answers will be handled anonymously and confidentially. Thanks for sparing your
valuable time! l funds and stocks for long-term basis and sat on them. Now they can invest
in stocks, stock and index options, mutual funds, individual, government, corporate,
municipal bonds, various types of IRA account, mortgages and even insurance.
• Online trading has made it possible for one to find investment options that were not
available on a regular basis, like offbeat net stocks, centric unique things and trading in
global market.
• Online trading has left room for smaller organizations to compete with multinational
organizations since size is no longer a legit issue, Being online does not identify the size
of any particular organization therefore this gives additional power to the undergoes.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 33

• Online trading has allowed companies to locate themselves where they want, as 'physical
location' is not an issue anymore. Companies can establish themselves according to their
gains and losses, for instance where tax (sales and value added taxes) are best suited to
them.
• Online trading gives control to individuals and they can exercise it over their accounts
thus comprehend what is going on when they trade. It is like going back to school and re-
educating oneself on how to trade online.
• Individuals benefit by saving comparatively a lot mare when trading online as the cost
per trade is less.
• Individuals can invest in a variety of products, unlike earlier when people bought bonds,
mutual funds and stocks for long-term basis and sat on them. Now they can invest in stocks,
stock and index options, mutual funds, individual, government, corporate, municipal
bonds, various types of IRA account, mortgages and even insurance.
• Online trading has made it possible for one to find investment options that were not
available on a regular basis, like offbeat net stocks, centric unique things and trading in
global market
Disadvantages of Online Trading
• When network crashes, there will be problems and delays due to a large influx of traffic
and rapid online trading criteria. For instance on 27 October 1997, there was a one-day
crash ,which caused online trading on the New York Stock Exchange to stop and brokers
were unable to conduct business.

• Individuals are restricted to first hand financial guidance. This simply means that the
individual is himself/herself alone to make the decision.

• Tax (Sales tax and Value-added tax) evaluation becomes an issue .especially when you
are trading internationally.

• Chances are that one has no idea who one is dealing with on the other end. So it is
advisable to gather all the possible information about the party one is dealing with. In short,
do the homework and be prepared.

• On-line trading has left individuals open to too much information. This is harmful since
it leaves brokerages wide open to sensitive data.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 34

 • According to a study conducted by Mary Rowland. Careful Investor. Is online trading
bad for your portfolio? The more one trades the less returns one gets, meaning that an
addicted trader gets carried away online and begins to trade far too much which causes
losses for him or her.

• The study also shows that "smart’' investment is better than" fast" investment. Simply
put, speed should not be considered to be a major factor that would lead any online trader
to think they know the market.

• Individuals think that are wit the market directly and know what they are doing, but the
truth is that even though technology has taken over, the basic rules of trading are the same.
It seems that the middlemen has been removed, but that is not so. When the individuals
click on the mouse, his trade goes through a broker. The commissions online pertain to the
intermediately• There is a need for more effective communication links over the Internet and the
ability of the server to deal with a large volume of visitors. Given the pulses and need to review the
psyche of investors who go online and see what issues enable them to choose an appropriate.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 35

 REVIEW OF LITERATURE

 Stock-broking service, a branch of financial services sector, is undergoing rapid

changes. The changes that are taking place in the financial services sector are
reverberated in the stock market also. The practices and techniques adopted and
found to be successful in other stock markets are being implemented in the Indian
Stock Market also. Some ~f the practices and techniques thus implemented are
screen based trading, dematerialisation of share certificates, options and fuiures
trading, Automatic Lending and Buying Mechanism (ALBM), rolling settlement,
etc. A number of learned writers have expressed their opinion about the recent
trends and practices adopted in the Indian Stock Market. The difficulties and
problems experienced by brokers are also highlighted by many writers. A brief
review of their ideas, thoughts and comments are narrated in this chapter.

 Indicating a strong sentiment against speculation in the stock market,

Vijayaraghavan R (1992) suggests that the exchanges should adopt as quickly as
possible uniform settlement system so that wide price variations across exch,inges
can be avoided and the ordinary investor afforded protection from violent price
swings. Further, he adds that the stock exchanges should work towards a shorter
settlement period, which wou'd tone up market efficiency and ensure that payment
and deliveries art. made in time.'

 Rajiv Handa (1995) makes a comparison of practices in developed markets and

developing markets. He says, "It is in the developed markets of the West that
business trends, trade cycles and a host of other factors are taken care of by
computers and forecasting models. This information is backed by decades of
diligently stored data which is updated by continuous release of contemporary
information by the listed companies". He further states that the situation back home
is materially different and the company reports are available six months after the
year ends which lose relevance by the time they are analysed.

 Suresh Prabhu (1995) participating in a seminar organised by the Cochin Stock

Exchange on 'stock-broking in the changed scenario', points out, "In order to
be8:ome successful in the share broking business, the changed scenario looks for
professional standards, functional strength backed by corporate right, ethical
behavior and a comprehensive and total approach to business from the part of
stockbrokers". He also states that with corporatisation of memberships, the
members shall provide multiple services to investors.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 36

  In his opinion, the brokerage charged has to be responsive to the cost. He concludes
his prc!sentation with the remark that there is tremendous opportunity in the state
of Kerala for development of capital market activities.

 Chari P.S.U. (1995) tliscusses the emerging role of financial services. He states that
a vibrant and competitive financial system is imperative to sustain the onging
reform in the structural aspects of the real economy. Disclosure requirements and
accounting practices too have to be in line with intznational standards. Areas like
security analysis, equity research and ~ortfolio management are fast emerging
financial services. According to him, one major factor which may perhaps retard
the growth of this sector is the dearth of qualified and trained personnel. A proper
training set-up which can provide comprehensive training to the intermediaries has
become irnrninent.

 Louis K.K. (1996), Senior Programmer, Cochin Stock Exchange, speaks about the
in~plementation of screen based trading at the CSE. "Our mission is to develop
Cochin Stock Exchange as a modern stock exchange which will help capital
formation for industrial development of India by providing issuers, national and
foreign investors with fair, secure ancl efficient market place. We will achieve this
through novel modernisation measures, sound trading and settlement systems,
modernisation of operations, transparency of business, professionally qualified and
extremely dedicated team for better regulation of trading; and ensuring investors'
care". He concludes his presentation with the remark that the CSE would become a
high-tech model stock exchange at par with international counterparts.

 Menon T.N. (1996), ii member of the Cochin Stock Exchange speaks about market
making. In his opinion, good market-making is essential not only for inactive
securities, but also for moderately active and daily traded securities. Such an
activity will need the support of the banking system and also co-operation from the
listed companies. He further points out that because of varying market sentiments
and changing investor perceptions, there will always be mis-match between buying
and selling orders of ir~vestors in respect of any security on any given day in the
market in terms of timing and quantity. This leads to buying orders remaining
unexecuted on the one hand and poor liquidity for those who wish to disinvest on
the other hand. It is against this background that the role of efficient market- making
has been widely recognised in the lea,3ing stock exchanges of the world as essential
intermediaries.
 Cautioning the broE ing community, Sivakumar, K. (1996), says that stock-broking
is at the crossroads, with the falling values of stock exchange membership cards
and the rapidly declining brokerage levels and jobbing spreads. He feels that the
broking community, barring exceptions, is also not ?quipped to handle the rapid

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 37

 changes in the environment. With the setting up of the National Stock Exchange,
there has been a major use of technology for stock market trading. At the share-
broking level, the decline of regional stock exchanges is visible. Individual
stockbrokers, who are unable to cope up with a combination of increased
responsibilities and requirements, fall in activity level and diversion of business to
major exchanges. He concludes that the broking corununity shall recognise the
changes and work towards consolidation 2nd positioning in such a way as to be
able to take advantage of opportunities that lie ahead.7

 Mayya M.R. (1996), warns the stockbrokers by stating that the business in stock
market is shrinking with the small investors having virtually deserted the market.
The disenchantment of small investors for equity investment has adversely affected
the existence and survival of the broking community. He observes that some of the
policy decisions taken by the (~uthorities are responsible for the small investors'
exit out of the market, although the policy makers have certainIy not desired so. He
k of the view that pricing of new issues shall be subject to strict norms as the deep
erosion in prices of new issues on a wide front has been the single most important
factor which has caused total dismay among; the small investor Pointing out the
difficulties of the stock-broking profession, Krishnakumar P.K. (1998) speaks
about brokers in the Cochin Stock Exchanges"Faced with a shrinking primary
market, and a slothful secondary market brokers in the Cochin Stock Exchange are
fighting with their backs to the wall. It is a dismal scenario.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 38

 RESEARCH METHODOLOGY

The research study is Exploratory in nature. In this study, a combination of

primary & secondary data has been used.

PRIMARY OBJECTIVE
Study of Online trading

SECONDARY OBJECTIVE
 To examine the perception of investors regarding online trading
 To examine the preferences towards existing online trading firm
 To find out various for online trading usage
 To know the p reference of investors towards conducting their online trading
transactions.
 To examine which criteria is important for the investors while opening an account
in a brokerage house in online trading
 To find out knowledge level of investors regarding online trading
 To examine general awareness regarding online trading
 To know about different act related to online trading
 To find out awareness level of investor’s right towards online trading
 To find out awareness level of investor’s responsibility towards online trading

SCOPE OF THE STUDY:

PRIMARY SOURCE

I conducted a mail survey . I sent to my friends and all the closed one’s . Also I sent it to
my dad colleagues who all are into online trading and are doing it since 3-5 years . survey
had all the major questions from age to income to all the requirements required for online
trading

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 39

SECONADARY SOURCE

The data was collected from

 Magazines
 Newspapers
 Books
 internet

LIMITATIONS OF THE STUDY

 The Current study depends on essential information taken from different

commercial ventures of India (metro urban areas) by filling an endorsed poll.

 The outcome’s virtue is relies on upon the information’s immaculateness. Every

one of the conclusions and recommendations are given from the factual
investigation of the few proportions ascertained. The point of view of E-business
can be measured through numerous different ways.

 The essential inborn confinements of figures, computations, factual investigation

and human slip are the study’s restrictions. Much care and perseverance have been
practiced in making every one of the estimations, measurable investigation and
getting conclusions from it however then likewise there can be some human lapse,
which will make the study weaker to that degree.

 The study is done for restricted quantities of mechanical units just. It is hard to
make inferences from test for the entire business. Subsequently the impediments of
test study apply to this exploration also. The study is done for the Maharashtra state
to infer decisions about the point of view of E-trade of the commercial ventures in
general. The idea of E-business is widespread. So the speculation can’t be
conceivable.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 40

 DATA INTERPRETATION

AGE GROUP NUMBER OF PERCENTAGE

RESPONDENTS
0-18 13 19.1%
18-25 39 57.4%
26-35 7 10.3%
36-50 6 8.8%
50 and above 3 4.4%

Here 57.4% of the people which is the majority of the people are from the age group is 18-
25 use online trading the most
Next are 0-18 age group ,these are mostly the students , they cover 19.1% which is the
second most
Age 26-35 are the third in the line with 10.3% , they just are over one-tenth
Age 36-50 are just 8.8% and just below the 26-35 age mark
The older generation use the lowest online trading because they don’t trust the online
procedures and are scared of losing money

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 41

GENDER OF RESPONDENTS

Male 64.7%

Female 35.3%

Other nil

Here two third of the people are male and one third of the people are females. 10 years
back the ratio was 5:1 but now its 2:1 which is very good for the nation.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 42

WHETHER INTERESTED IN ONLINE TRADING

Yes 63.2%

No 36.8%

More than 60% are interested in online trading and almost 40% are not interested in online
trading which is impressive for the nation.
Most of the people have increased interest in equity market as well as bonds and debentures
, but it depends upon perspective of every person.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 43

INCOME OF RESPONDENTS

INCOME SLAB NUMBER OF PEOPLE PERCENTAGE

0-100000 29 42.6%

100000-300000 16 23.5%

300000-500000 17 25%

500000 & above 4 5.9%

No income 1 1.5%

Studying 1 1.5%

68 100%

Majority income here is between none to 1,00,000 with 42.6%, which is then followed by
3,00,000-5,00,000
The third category is 1,00,000 – 3,00,000 with 23.6%.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 44

INVESTMENT IN A YEAR
INVESTMENT (Rs.) NO. OF RESPONDENTS PERCENTAGE
0-25000 39 57.4%
25000-50000 14 20.6%
50000-75000 4 5.9%
75000 or more 7 10.3%
Not tried yet 1 1.5%
Nil 1 1.5%
No income 7 10.3%
I don’t invest 1 1.5%

There are just main majority here. Firstly 0-25000 with 57.4% and then 20.6% investing
about 25000-50000 INR per year

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 45

PREFERRED TYPE OF INVESTMENT

TYPE OF LOAN NO. OF RESPONDENTS PERCENTAGE

Short Term 28 41.2%

Mid Term 18 26.5%

Long Term 22 32.4%

The response is quite mixed in this case with people arguing over, should they chose equity
shares or not . People here take part mostly in short term with over 40% followed by mid
term loans with 32.4% and lastly long term loans with 26.5%

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 46

FREQUENCY OF INVESTMENT
FREQUENCY NO. OF RESPONDENTS PERCENTAGE

Weekly 8 11.8%

Monthly 19 27.9%

Quarterly 16 23.5%

Yearly 16 23.5%

These stats are quite interesting to be fair.

There are 11.8% people investing every week, 27.9% people invest monthly and 23.5%
people investing quarterly and 23.5% people investing yearly.
There are 2.9% people who haven’t invested even once.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 47

INVESTMENT IN EQUITY MARKET
WHETHER INVESTING NO. OF RESPONDENTS PERCENTAGE

Yes 35 52.2%

No 32 47.8%

Here there is a very mixed opinion on investment in equity market or not. 52.8% are in
favour of investing in it and 47.8% oppose the same
Equity share are very risky and people don’t trust it easily therefore there are so many
rejections for that.
Preference shares are relatively less risky than equity

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 48

EXPERIENCE IN MARKET
WHETHER NO. OF RESPONDENTS PERCENTAGE
EXPERIENCED
Less than 3 years 45 66.2%
3-5 years 17 25%
5 or more 6 8.8%

More of the youths are participating in the online trading platform, hence the experience
between 0-3 years is 68% , then 3-5 years people are having 25% exact .

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 49

TYPE OF INVESTOR
TYPE NO. OF RESPONDENTS PERCENTAGE
Hereditary Investor 17 25%
New Generation Investor 51 75%

Most of the people are new generation invester with over three – fourths . The hereditiary
type of investers are declining day by day in this market.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 50

TYPE OF MARKET
TYPE NO. OF RESPONDENTS PERCENTAGE
Primary Market 26 38.2%
Secondary Market 22 32.4%
Both 20 29.4%

Primary market are given more importance than the secondary market, although 30%
almost invest in both the market

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 51

TYPES OF STOCKS HELD
TYPE OF STOCK NO. OF RESPONDENTS PERCENTAGE
IT Sector 10 14.7%
Bank Sector 29 42.6%
FMCG 31 30.9%
None 2 2.9%
Non 1 1.5%
Gold 1 1.5%
Mixed 1 1.5%

Here people mostly buy bank sector stocks which is followed by fast moving consumer
goods with one third and is followed by IT Sector with 14.7% .

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 52

EXPECTED RATE OF RETURN
RATE OF RETURN NO. OF RESPONDENTS PERCENTAGE
Less than 12% 22 32.4%
12.24% 37 54.4%
24-36% 5 7.4%
36% or more 4 5.9%

More than half of the people get 12-24% of expected rate of return followed with 0-12%
with 32% and very less having more than 24%

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 53

NUMBER OF COMPANIES INVESTED IN
NUMBER OF NO. OF PERCENTAGE
COMPANIES RECCOMENDATIONS
0-10 44 64.7%
10-20 20 29.4%
20 or more 4 5.9%

Most of the people have invested money in 0-10 odd companies, this is because they might
not want to take huge risks with their savings or income , only 29% have invested in more
than 10 less than 20 companies

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 54

 FINDINGS
In The data collected I analyzed that,
Here 57.4% of the people which is the majority of the people are from the age group is 18-
25 use online trading the mos
Next are 0-18 age group, these are mostly the students , they cover 19.1% which is the
second most
Age 26-35 are the third in the line with 10.3%, they just are over one-tenth
Age 36-50 are just 8.8% and just below the 26-35 age mark
The older generation use the lowest online trading because they don’t trust the online
procedures and are scared of losing money
More than 60% are interested in online trading and almost 40% are not interested in online
trading which is impressive for the nation.
Most of the people have increased interest in equity market as well as bonds and
debentures, but it depends upon perspective of every person.
Majority income here is between none to 1,00,000 with 42.6%, which is then followed by
3,00,000-5,00,000
There are just main majority here. Firstly 0-25000 with 57.4% and then 20.6% investing
about 25000-50000 INR per year
The response is quite mixed in this case with people arguing over, should they chose equity
shares or not . People here take part mostly in short term with over 40% followed by mid
term loans with 32.4% and lastly long term loans with 26.5%
There are 11.8% people investing every week , 27.9% people invest monthly and 23.5%
people investing quarterly and 23.5% people investing yearly
Here there is a very mixed opinion on investment in equity market or not. 52.8% are in
favour of investing in it and 47.8% oppose the same
Equity share are very risky an people don’t trust it easily therefore there are so many
rejections for that
Preference shares are relatively less risky than equity
More of the youths are participating in the online trading platform, hence the experience
between 0-3 years is 68% , then 3-5 years people are having 25% exact .
Most of the people are new generation invester with over three – fourths . The hereditiary
type of investers are declining day by day in this market.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 55

 SUGGESTIONS AND RECOMMENDATIONS

SUGGESTIONS
Stock broking firms that have adopted online trading, they can encourage non-adopters to
have a trial with mock online stock trading service, for instance, by offering access to a
‘Guest Account’. The share broking firm may take steps to develop investment strategies
based on the needs and skills of investors. Investors may be given more individual training
is critical to address individual investors’ unique needs. During training, increasing the
trials may increase the interest to try online chat trading. Therefore, investors may be given
the opportunity to try out different Internet applications, especially applications that
support online share trading activities. To overcome online share trading barriers, training
programs may be conducted on a regular basis to the investors on the use of different online
applications and services. Increasing the awareness of the importance of the online share
trading may improve the present situation.

RECOMMENDATIONS

The present study covered only individual investors. It may further be extended to Internet
brokers and Non-Net brokers. Besides, future studies may also be carried out to include
other regions of India, more demographic variables or contextual variables. Rather, future
studies can be conducted cross-culturally to give inclusive, comparative, and more
generalized results.
The replication of this research can be applied to other online products, for example online
banking, online financial investment, and trading of foreign exchange currencies online.
Future research could also be carried out in other industries beside financial, for example,
online education, online purchases of consumer goods, or online purchases of business
inputs products. The replication of this research could be applied in other geographical
regions. The research has investigated pre-adoption factors as well as Technology adoption
factors that affect the post-adoption consequences of online securities trading, however
there may be many other factors that influence trading behavior. Future research should
build on the findings of this study and should try to identify additional factors associated
with post-adoption consequences of online share trading.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 56

 CONCLUSION

The investigation to find out the technology adoption behavior and attitude of online share
trading investor in Tirunelveli District examined the relationship between the adoption
behavior and investor behavior. Online trading 204 empowers investors to make their own
decision with close watch on market sensitivity by browsing through various websites.
Besides, net trading assures achievement of objectives of investment which are creation of
efficient market to meet global requirements and investors protection. Results of this study
clearly indicated that attitude dimensions and demographic variables contributed
significantly in classifying investors as adopters of online share trading. As far as the
demographics were concerned, the mature/older, experienced, and businessmen investors
were less likely to use Internet-based trading as compared to young, inexperienced, and
non-businessmen investors. Today’s investors are fully aware about the stock market. The
purposes of share trading and market movements affect the investment pattern of investors
in the stock market. The arrival of the internet has not only spurred the development of
new industries in recent years but it has also changed the business model of many others.

The research model gives knowledge to the investor and to build the relationship to the
marketers. By understanding which pre-adoption factors influence post-adoption usage
behaviour, online brokerage companies can focus their product development and
marketing communication strategies to increase the use of online securities trading and
thus expand their businesses. Because investors are critical today and will be more critical
in future. Thus, it is important to develop online share investors relationship to the online
share trading companies. The mobile commerce has been entered in finance, services,
retails, and telecommunication and information technology services.

Investing is viewed as a complex process because it requires investors to synthesize

information from different sources and take appropriate actions. The lower effort cost
associated with online transactions leads traders to execute smaller value transactions in
their online trades relative to phone trades. Thus, the brokerage firm would be able to
formulate a new product and provide a chance to enhance the usage of online securities
trading. Social and cultural practices do affect the level of importance on normal share
trading behavior. The growing availability of online trading technologies is believed to
have had a large effect on stock market volume and volatility.

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 57

 BIBLIOGRAPHY

Web-Sites
1. www.BSEIndia.com
2. www.Capitaline.com
3. www.Capitalmarket.com
4. www.Wekipidia.com
5. www.CNBC.com
6. www.Moneycontrol.com
7. www.Indiainfo.com
8. www.googlebook.com

9. www.wikipedia.org

News Papers
1. The Economic Times
2. Business Standard
3. The Times of India

Reference Books:
1. Bharti V. Pathak, “The Indian Financial System”, Pearson Education [India] Ltd. 2 nd
Edition, Year 2006.
2. V. K. Bhalla, “Investment Management”, New-Delhi, Sultanchand & Sons Publication,
10th Edition, Year 2004.
3. Prasanna Chandra, “Investment analysis & Portfolio Management”, New-Delhi, The
McGraw Hill Company Ltd. 6th edition, year 2006

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 58

 ANNEXURE
Dear Respondent,
I am Dashmeet Ratra , pursuing a bachelors degree. This
questionnaire shall take about 15 to 20 minutes to answer. All answers will be handled
anonymously and confidentially. Thanks for sparing your valuable time

1) NAME OF THE CUSTOMER-

2) AGE
3) GENDER

Q4) WHAT IS YOUR ANNUAL INCOME ?

 0-100000
 100000-300000
 300000-500000
 500000 AND ABOVE

Q5) ARE YOU INTERESTED IN ONLINE TRADING?

 YES
 NO

Q6) HOW FREQUENTLY DO YOU INVEST IN A YEAR?

 DAILY
 WEEKLY
 MONTHLY
 QUARTERLY
 YEARLY

Q7) HOW MUCH DO YOU INVEST IN A YEAR?

 0-25000
 25000-50000
 50000-75000
 75000 AND ABOVE

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 59

Q8) ARE YOU INTERESTED IN EQUITY MARKET ?
 YES
 NO
Q9) WHAT TYPE OF INVESTMENT DO YOU TAKE PART IN ?
 SHORT TERM
 MID TERM
 LONG TERM

Q10) STATE THE TYPES OF STOCKS YOU HAVE ?

 IT SECTOR
 BANK SECTOR
 FAST MOVING CONSUMER GOODS
 OTHER

Q11)STATE THE TYPE OF INVESTOR YOU ARE?

 HERIDITIARY
 NEW GENERATION

Q12) TYPE OF MARKET OPERATED ?

 PRIMARY MARKET
 SECONDARY MARKET
 BOTH

Q13) STATE THE SOURCE OF INVESTMENT?

 SAVINGS
 BORROWINGS
 BOTH

Q14)NUMBER OF COMPANIES INVESTED IN?

 0-10
 10-20
 20 AND ABOVE

Guru Nanak Khalsa College of Arts, Science 7 Commerce, MATUNGA (E) 60