Internet trading has picked up in a big way across India with nearly 20% of the trading volumes being accounted for by the internet. That is hardly surprising. Internet trading is cheaper, it is quicker and it is a lot more transparent. Having said that, it is after-all driven by technology and hence you need to exercise caution while trading on the internet. Here are 10 precautions you must use while you trade on the internet.
10 points of caution when trading on the internet
- Your first priority is the hardware that you use for trading on the internet. Today it is possible to use your PC, laptop, smart phone or tablet to trade on the internet. The first thing to ensure is that it is not a shared computer and that only you have access to this particular hardware. Accessing your trading account is a strict no when it comes to public computers, cyber cafes and even from airport lounges.
- The next thing to focus on is the internet connection. You obviously require a robust internet connection but ensure that the internet connection has a firewall and also is a secured connection. Trading on public Wi-Fi internet connections at malls and airports is best avoided. Also avoid tethering hotspots as they are prone to hacking
- Is your computer virus protected? Most hardware comes with pre-installed anti-virus software. In case your anti-virus has expired then immediately renew it so that your protection continues. In the absence of anti-virus software popular viruses like Trojan can make a mess of your computer and your trading system.
- Apart from the anti-virus also ensure that an anti-malware is also installed in your PC or laptop which are using for trading. These anti-malwares prevent rogue files from getting downloaded on to the system. Some of these rogue software get downloaded on your system and compromise your data. Ensure that your anti-malware is updated.
- How do you know that your trading system has been compromised? There are a variety of indications. For example, your system could suddenly become very slow. Your computer may keep crashing at periodic intervals. Alternatively, you may find that new windows are opening without any rhyme or reason. All these indicate that your system integrity has been compromised. Immediately shut down the system and consult a hardware engineer to ensure that your data is not compromised.
- Don’t ever leave your system unattended when you are logged into your trading system. Even if the PC is in your house or in your office cabin, make it a point to log off from your system. Remember to log off from your account not just close the window. Leaving your logged in system unattended is an invitation for compromising your data. Since the auto log-off takes some time, you are leaving a window open for misuse.
- How to ensure security of your trading account access? A few basic rules should be in place. Don’t set obvious passwords like your name, spouse’s name, date of birth etc. Keep changing your passwords regularly (at least once in 15 days) and never write down the password on a piece of paper. Most brokers provide double level authentication. The second level can be static or dynamic. Opt for a dynamic second level password which you will receive as an OTP on your registered mobile. This adds to the safety and security of your trading account access.
- Avoid the temptation of cookies and don’t let your system remember your trading password. These are shortcuts to compromising your trading account. Ensure that each time you are required to enter the user name and password from scratch. Even if the computer wants to simplify your job by remembering via cookies, just give it a skip. Also take care of your hardware. Don’t download random software and files on your hardware, especially when you are using that system for your internet trading access.
- Be wary of phishing mails. What are phishing mails? These are anonymous mails sent by hackers and spammers using fake ids. The normally claim to be from Income Tax, SEBI or RBI and ask you to provide details of your trading account and bank accounts. None of the regulators will ever ask you for confidential information on email. These are just tricks used by hackers to hack into your trading account. Be wary of them.
- Your online trading account is machine operated so ensure that you reconcile the audit trail. This may appear to be a mundane job but it is absolutely essential. Once the order is placed, check the order book and then ensure that the trade book executes as per your instructions only. Reconcile your digital contract notes with your trade book on a weekly basis. Also ensure that your trading account balance is reconciled with the ledger account which is also available online. When you apply these audit trails, you can automatically trace any such problems before it becomes a crisis.
Internet trading is a great boon for small and medium sized investors in equity markets. By applying some basic safety rules, you can go a long way in securing your trading account much better!