Volatility is a statistical measure of the amount of fluctuation in a stock’s price within a period of time. A stock with high volatility would have rapid up and down movements in its stock price. A stock with very little movement in its price would constitute low volatility. There are two main measures of Volatility: Historical Volatility & Implied Volatility. Historical volatility will be discussed in this report whereas implied volatility will be explained in the subsequent report.
Online trading in securities refers to the facility of investor being able to place his own orders using the internet trading platform offered by the trading member viz., the broker.
The orders so placed by the investor using internet would be routed through the trading member
To start with, investor needs to identify a trading member who offers internet trading facility and register with the trading member for availing the internet trading facility
Usually, a person familiar in using computer, conversant with the use of internet and who is able to tackle routine problems associated with use of personal computers may opt for online trading
As per SEBI and Exchange stipulations, in addition to execution of regular KYC documents, the investor would have to execute a specific Member- client agreement for internet trading which broadly spells out the rights and obligations of trading member and Investor besides alerting on system related risk, confidentiality of user id and password
On registering as online trading client with the trading member, normally investor receives a welcome kit containing the user-id and password allotted to the client
Every online trading client should understand that there could be a possibility of failure of system which could include failure at various points including net work failure, connectivity failure etc.
In the course of his dealing, 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.
For every trade that takes place on the Exchange, the trading member needs to issue contract note within 24 hours from the date of execution of the trade. Generally, internet based investors opt for Digital contract notes. Hence, at the time of client registration investor should provide an email id which is regularly used.
In case investor wishes to receive physical contract notes, he may specify so in the client registration document and cut off the email id column.
Investor needs to regularly check the contract notes and if any variation in the trades is found needs to take up the issue with the trading member immediately.
Besides the Contract Notes, trading member needs to issue quarterly statement of funds and securities to the investor and such statement can be digitally issued if investor has opted for digital document.