Open a trading account for share trading

For online share trading having a demat account is the first and foremost thing that a trader should do in order to participate in the unique process of buying and selling shares from the various companies that are listed in the stock exchanges BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) on the basis of their market capitalization.

First of all, let us understand what is a demat account? It is an online medium through which shares and securities acquired by you will be held electronically. Dematerialized shares are maintained in a very safe environment where trading and transfer of securities become a very simple matter.

But it wasn’t always like that and before the concept of dematerialization (demat) existed. There were physical share certificates and gradually it became quite obvious, that it will soon be replaced by a more efficient system of conducting transactions. As there were serious flows with paper share certificates, due to loss of shares in transit or fire, forgery, signature mismatch etc.

But with a demat account all of these shortcomings were eliminated instantly and the stock exchanges were completely computerized to execute and settle trades more effectively. And now it is virtually impossible to think of any other alternative to demat accounts.    

To start trading in shares, you must approach a broker and open a demat account. Make sure that your broker is a Depository Participant and is registered with NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Securities Ltd.)

The DP is like an agent to NSDL or CDSL and the broker’s objective is to open a demat account for you that your shares and securities are held in an electronic form. But you also need a trading account to actually execute buying and selling of shares of the different scripts or companies listed on the stock exchange.

The advantages of opening a trading account are as follows:- 

1   1) No stamp duty charge has to be incurred by you, as the problem of physical shares is removed, as shares are transferred electronically.

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     2)With advanced trading software you will get chance to analyze live stock market updates, market analysis, charts, market news etc. in a single screen.

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     3) Every trade executed is done on a real time basis and the broker will facilitate buying and selling of shares on your behalf.