Starting off with the stock market and stock trading can feel overwhelming, but getting started is actually very easy with the right plan. To begin your trading, you will need to open two accounts, a Trading Account and a Demat Account. Both of these accounts are required to properly participate in the stock market.
Trading Account and Demat Account Definitions
Trading account:
Your trading account is essentially where you can buy and sell stocks. With a trading account, you can place orders for stocks at the stock market.
Account Demat:
You can think of your Demat Account as an electronic vault for your stocks. It is an easier and safer way to keep shares as physical shares are converted into electronic shares.
Is it necessary to open a Demat account along with a Trading Account?
Just like you can’t transact in the stock market without having a bank account, you can’t perform any stock market transactions without a Trading Account. In addition to a trading account, shares need to be stored within a Demat account.
The use of electronic shares has simplified the process of investment. These shares are kept on the Demat account.
How can I create a trading and demat account?
Opening a trading account and a demat account is straightforward. Steps on how to start these accounts.
Documents Required
To open these accounts, you would also need a PAN Card, Proof of Address, a bank account, and a passport sized photo as well.
KYC process
To open these accounts, the Know Your Customer process (KYC) has to be completed. This step involves a broker confirming your name and other information.
Account opening platforms
Some of the well-known depositories in India are National Security Depository Limited and Central Depository Services Limited, where you can open these accounts.
Where can I open these accounts?
Trading and Demat Accounts can be opened on the following trusted sites:
ICICI Direct Motilal Oswal Zerodha Sharekhan Angel Broking IIFL
You can open an account with a bank or with a brokerage firm. Before opening an account, make sure to check their brokerage fee, the services that they offer, and their overall standing.
Selecting the right broker is crucial for establishing a hassle-free trading experience. When searching for brokers do remember the following:
Experience and Knowledge:
Go with a broker that understands the markets as well as has past experience.
Compare Brokerage Charges:
These differ from one platform to another.
Service Availability:
Ensure the broker has online and telephonic customer service support.
Reputation:
Go with a broker that is known for his honesty and does not have issues regarding trust.
Steps to start trading
These are the steps you should take once you have your Trading and Demat account configured in order to embark on your stock market journey:
Familiarize yourself with the Broker’s Platform:
Make sure you understand the platforms’ app or website before anything else.
Choose Your Stocks:
At a minimum pick five companies which you are keen on. Check the prices, the trends, and how fast they may grow.
Monitor Stock Prices:
Begin to follow stock prices and see what moves are made in the market. You will be able to make informed decisions when it comes to selling and buying.
Conclusion
Now you know that by opening a Trading Account or Demat Account, you can dip your toes into the stock market. Choosing a good brokerage, understanding the nuances of the different types of accounts, and picking good stocks helps you build a portfolio with peace of mind. Remember to get acquainted with your platform, understand the fees, and stay informed about the market so you can make smart investments.
