Transcript Web & Stock Markets

ONLINE TRADING and
INVESTMENT MANAGEMENT
Presented By
Dr. Rana Singh
www.ranasingh.org
MBA (Gold Medalist)
Ph. D.
9811828987
[email protected]
The ability to learn faster than your competitors may be
the only sustainable competitive advantage
- Peter Senge
The Fifth Discipline
Evolution of Online Trading
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Only a decade ago, the primary method by which individual
investors were able to get information and trade on the stock
market was by going to the stock broker's office or calling the
broker on the telephone.
telephone automation allowed investors to dial into the broker's
computer system and place their trading orders without having
to go through a human operator.
As personal computers and telecommunications became more
prevalent, investors started to use their computers to dial into
their broker's systems and conduct their transactions
electronically.
Evolution of World Wide Web .
Services Available
Investment Management
Content/Data
Advice
Trading
Information
Financing Options
Account Management
Content/Data
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Information
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Real time stock quotes
Market Summaries
News & Headlines
Charts
Report and trade alerts
Advice
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Real time Chat with experts
New Investment Ideas
Forthcoming IPO advice & analysis
Financing Options
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Loans
Credit on sales done
Online Trading
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What can you trade?
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Stocks
Options
IPO’s
Mutual Funds
Bonds
Trading (Continued)
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Ways of trading
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Online
Interactive Voice Response(IVR)
Traditional Broker Assisted
Account Management
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Account Summary
Track Orders
Check trading limits
Check open positions
View Transactions
Cash & Securities due
A Typical Online Transaction
Place Orders
Web Server
User
Database
Confirmation
to User
Stock Exchange
Web Server
Stock Exchange
database
Confirmation
To the Brokers Server
Online Trading
A Simple Representation
Major Components
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Stock feed data source
Storage of stock data
Retrieving of data from the www
Stock feed data source
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Stock data is derived from a live data
feed connected to the exchange
Modem based connection to an NT
stock feed processing server for
preprocessing of the data feed before
broadcasting over the net.
Storage of Stock data
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Database server receives the packets
containing the updated information
It collects,reprocesses and stores the
information
Retrieving of data from www
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The web server running the software
accepts realtime stock data that is
updated on the database
The software queries the
database,formats the information and
presents it to the users.
Typical Functionality Provided
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Stock information retrieval system
Monitoring stock market movement
Stock market analysis
Personal portfolio management
Simulated stock transactional services
Information Retrieval System
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NT server broadcasts the Stock feed on
the network
Database server collects the stock feed
and stores it in the stock database
Stock info retrieved by querying the
stock database
Subfunctionality Provided
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General information on all the stocks
arranged in various orders
Up to date market summaries as well as
market indices.
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Top five gainers
Top five losers
Top five volumes
Monitoring market movement
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Stock database is updated continuously
for accurate monitoring from the
exchange
If the information received is new the
database server changes the records of
the current stock information
Market Analysis
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User can analyze the information using
the utilities provided by the system
User can download raw stock data in
the form of ASCII files and use them as
inputs for custom analysis tools
Portfolio Management
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Users can setup and manage their own
portfolio
Stocks kept in the portfolio are stored in
tables so that users can keep track once
they login
Portfolio profit calculation will aid the
users in their buy/sell decisions
Simulated Transactional
Services
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Users can trade as they do in the real
stock market environment
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User sends in a request which is queued
After some time the request is processed
according to the current stock prices
Brokerage fees ,contract stamp,clearing
fees are all taken into account while
preparing the bill which is sent to the user
Indian Scenario Opportunities
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Growing internet usage
There were 5.5 million internet users in
india in january 2001 and 48% of the
users accessed the net daily.
Nasscom predicts that there will be 300
million internet users in India by
December 2010.
Opportunities (cont.)
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e-commerce is now fully legal in
India with the information
technology act that took effect in
October 2000.
Along with lending a coherent legal
framework the act provides
penalties for cyber crimes.
Opportunities (cont.)
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People are enthusiastic about e-trading
Growing user base especially in
professionals and brokers.
Many first time users are becoming
loyal customers of services from sites
like ICICI direct and sharekhan.com
Threats
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Security threats
Internet penetration in India is still not good
enough.
People are still reluctant to trade shares
online, and prefer their traditional calling the
broker options.
Only the tech savvy, professionals and major
stock brokers are using it currently.
Threats
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Cyber laws have been formulated but
implementation is still not well tried out.
The general reasons for the use of the WWW for trading were as follows: -
Category
Why use the WWW?
Response
Number
Percent
Male
Female
Timely data
53
81.5%
81.0%
85.7%
Access News
53
81.5%
81.0%
85.7%
Discussions
22
33.8%
36.2%
14.3%
Convenient
56
86.2%
86.2%
85.7%
Faster Execution
16
24.6%
19.0%
71.4%
Fun
36
55.4%
55.2%
57.1%
The following was the result of the most preferred form of trade on the net
Category
Preferred Trading Method
Response
Number
Percent
Male
Female
Full Service
23
24.7%
31.3%
30.0%
Discount Broker.
31
33.3%
39.1%
60.0%
Automated
Phone
8
8.6%
9.4%
20.0%
Modem to
Broker
11
11.8%
14.1%
20.0%
WWW
20
21.5%
26.6%
30.0%
Preferred Source
Traditional.
Broker
12
15.0%
18.8%
0.0%
of Information
Automated
Phone
4
5.0%
3.1%
20.0%
Electronic
7
8.8%
7.8%
20.0%
WWW
57
71.3%
76.6%
80.0%
Percentage of people who believe that the net will be popular: -
Category
Response
Number
Percent
Male
Female
Interested in electronic
Yes
59
79.7%
79.7%
80.0%
On-line trading?
No
3
4.1%
4.7%
0.0%
Don't Know
12
16.2%
15.6%
20.0%
Will the electronic trading
Yes
44
59.5%
57.8%
70.0%
Become more popular
No
17
23.0%
23.4%
20.0%
Than traditional brokers?
Don't Know
13
17.6%
18.8%
10.0%
Will digital stock exchanges
Yes
34
45.9%
46.9%
40.0%
Become more popular than
No
20
27.0%
31.3%
0.0%
Traditional stock markets?
Don't Know
20
27.0%
21.9%
60.0%
Advantages of Online Trading
over Traditional Modes
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Eliminates manual order entry and paper trail
Increases accuracy and speed of placing
orders.
Better record keeping by investors, brokers
and regulatory organizations.
Investors can make more informed
investment decisions because they have
access to vast amounts of data round the
clock which can be accessed from the
convenience of home, office or anywhere else
the investor can get access to the Internet
Advantages of Online Trading
vs Traditional Modes(Cont.)
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The WWW also provides a wide variety of
analysis tools to aid the serious investor. Such
tools range from simple graphs and charts of
historical data, to complex technical analysis
that predicts the movement of stock prices.
Investors also have the choice of using online portfolio tracking tools that can
automatically place a buy or sell order when
certain events are triggered such as an
increase or decrease in stock price. All these
tools serve the user by providing them with
better information for making investment
decisions.
Reality Check
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Perception of inadequate security &
privacy
Difficulty of electronic funds transfer
Information may be inaccurate or false
Risk of system failure
Slowness in internet access or a digital
meltdown
Reality Check (Cont.)
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Digital meltdown
Caveat emptor
Future Trend
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Stock brokers will have to provide etrading to remain competitive
Resolution of perceived security issues
will give popularity to electronic trading
Advances in hardware and software will
increase efficiency of electronic trade
executions
Choosing a safe Password
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Should not be names or personal information
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Should not be a word from the dictionary
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Should not be sequence of letters or numbers
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Should be at least 6 characters long
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Mix UPPER CASE and lower case letters
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Mix letters, numbers and punctuations
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Find a way to remember
Symmetric Encryption
and decryption
A
Plain text
HI Bob.
B
Ciphertext
Encryption
&#@*;t
Plain text
Decryption
Key e = Key d
Key e
Key d
Myth -Clarification
Hi Bob.
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Thank You