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The modern era of trading and investment has ushered in India due to emerging and evolving digital trading networks and platforms. As per industry analysis, the market size of digital trading platforms is expected to surpass 15.34 billion USD by 2020. The widely spread internet accessibility and availability with quick technological advancement have made digital trading platforms popular among traders and investors.
People are offered accessible and convenient avenues through these networks, which assist them in participating in many financial markets, including the forex market, commodities market, stock market, etc., through mobile and web applications. However, it is crucial to understand the benefits and risks involved when dealing with digital trading platforms.
The participation of traders and investors in financial markets has revolutionized due to rising digital trading platforms. The platforms offer information availability and enhanced transparency to give investors access to the firm’s information, research reports, and real-time data on the market. Investors can make a wise choice in deciding their investment strategies.
It also assists them in levelling the playing field among institutional and retail investors and gives them the resources and tools for their effective competitive approach in the industry. The benefits offered by such networks include individual investors’ empowerment, diversified investment options, lower costs, accessibility, etc. Besides, certain risks of dealing with the networks must be addressed to trade effectively through digital trading platforms.
Financial markets are increasingly available through digital trading platforms since access is democratized. All geographical barriers are removed to let investors perform trading activities from every region. The easy availability of traditional trading networks’ locations near major financial market centres' limitations is eliminated. Anyone with internet access from any region or location can invest and trade.
Unparalleled flexibility and convenience are provided to investors and traders through digital trading platforms. Market movements can be monitored, and trading accounts can be accessed 24/7 to let investors trade or invest whenever and wherever they want. Besides, investors have easy accessibility to these platforms through mobile applications, laptops, or desktop computers. It helps them trade or invest even when they are travelling.
Investment and trading cost is significantly reduced on digital trading platforms. Traditionally, retail investors faced challenges in participating in the trading industry due to brokerage firms' high commissions and fees. However, digital trading platforms offer low trading costs and fees, making trading execution much easier for investors and traders. Many platforms even offer 0% trading commission to make trading and investing affordable for investors.
Digital trading platforms provide a wide range of asset classes and investment opportunities accessibility. It assists investors in trading derivatives, international markets, cryptocurrencies, commodities, bonds, and stocks. Such diverse investment opportunities let investors explore several avenues and maintain versatile portfolios for prospective returns.
Investment or trade in the financial market through digital trading platforms also has certain risks, as with other approaches. Investment performance can be impacted due to economic uncertainties, and asset costs fluctuations and market volatility. Investors must know about the potential losses and risks involved.
Investment and trading participation are made easier through digital trading platforms. But, it becomes challenging for inexperienced investors to understand and learn about the trading industry. It makes them suffer financial losses since they are more likely to make the right investment choices since their knowledge of risk management, market dynamics, and investment strategies is insufficient.
Internet connectivity and technology is the most crucial requirement for digital trading platforms. Even though these platforms are additionally efficient due to technological advancements, they inherit certain risks. Outages, system failures, or technical glitches don’t let investors trade at the required prices and disturb their trading and investment activities.
Digital trading platforms operate within regulatory settings, and their compliance is crucial. It ensures market integrity and investor protection. Investors and trading operators find it challenging to navigate complex requirements imposed by regulatory frameworks and remain updated with changing regulations and rules. The accessibility and functioning of digital trading platforms can be impacted due to regulation changes or non-compliance with regulatory frameworks.
As per the online trading platform market size of digital trading platforms, the industry is anticipated at a CAGR OF 6.4 per cent. Trading and investment have been significantly transformed due to evolving digital trading platforms. These platforms have provided new opportunities for investors and traders in India through easily accessible and convenient systems.
Investors can navigate the trading industry from anywhere and benefit from their investments and trades through awareness and the right approach.
However, investors and traders must learn the risks of digital trading platforms and take the necessary steps to overcome them successfully. Due diligence and performing in-depth analysis and research will help them mitigate inherent risks.
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