An Indian citizen needs a Demat and trading account if they want to start trading in the share market or stock market. Two depositories, known as NSDL and CDSL provide Demat and trading accounts in our country and this is done through brokerage firms which are also known as share brokers or stock brokers. The trading account is the account where a person can place bids to buy or sell orders while the demat account holds the shares in dematerialized form. Opening a trading account is relatively easy if you follow these easy steps:
• The first step of opening a trading account requires you to find a stock broker or firm. There are two types of brokers- full service and discount. In India, people generally go for full service brokers. The services rendered by such a broker in addition to buying and selling of shares are market research and also providing advice for retirement and tax-planning. Discount brokers are new to our country. They provide a no-frill account and also charge a much lower fee when compared to full-service brokers.
• You should always compare brokerage fees before opening a trading account. This is because all brokers charge some fees or take some commission processing your investments. The charges also vary from one broker to another. Some brokers also charge fees on the basis of the amount of the investments that they handle. Some others also give discounts if the amount is high. Thus, you need to keep in mind all these factors before choosing a stock broker.
• Finally, you need to complete your KYC or Know Your Client form. This form needs to be filled up and submitted along with your documents like Voter ID card, PAN card, birth certificate, passport and others. You will receive your trade account details after the application has been checked and verified.
After opening an online trading account, a person can start trading i.e. he/she can start buying and selling shares or stocks. It can be done over the phone or via the internet.
A demat account is required for a person to trade as it holds all his/her shares in electronic or dematerialized form. A person will not be able to trade in the stock market if he/she does not have a demat account. A demat account offers benefits like reducing the risks of deliveries, reduces costs associated with stamp duty, makes it much easier to hold and there is no fear of damage which can occur in case of paper certificates and also acts a common bank where you can keep your debt instruments in addition to shares.
• The first step of opening a trading account requires you to find a stock broker or firm. There are two types of brokers- full service and discount. In India, people generally go for full service brokers. The services rendered by such a broker in addition to buying and selling of shares are market research and also providing advice for retirement and tax-planning. Discount brokers are new to our country. They provide a no-frill account and also charge a much lower fee when compared to full-service brokers.
• You should always compare brokerage fees before opening a trading account. This is because all brokers charge some fees or take some commission processing your investments. The charges also vary from one broker to another. Some brokers also charge fees on the basis of the amount of the investments that they handle. Some others also give discounts if the amount is high. Thus, you need to keep in mind all these factors before choosing a stock broker.
• Finally, you need to complete your KYC or Know Your Client form. This form needs to be filled up and submitted along with your documents like Voter ID card, PAN card, birth certificate, passport and others. You will receive your trade account details after the application has been checked and verified.
After opening an online trading account, a person can start trading i.e. he/she can start buying and selling shares or stocks. It can be done over the phone or via the internet.
A demat account is required for a person to trade as it holds all his/her shares in electronic or dematerialized form. A person will not be able to trade in the stock market if he/she does not have a demat account. A demat account offers benefits like reducing the risks of deliveries, reduces costs associated with stamp duty, makes it much easier to hold and there is no fear of damage which can occur in case of paper certificates and also acts a common bank where you can keep your debt instruments in addition to shares.
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