Depository account for online share trading

Buying shares means that you are having a portion of a business. It is like acquiring a small piece of the cake from a bigger chunk. And an individual who buys shares of a company is known as the shareholder of the company.

The process of buying and selling of shares has become comparatively safe, secure and very convinient in the form of depository services. A Stock broker will provide it’s clients with the provision of depository services that includes settlement, clearing and custody of securities, registration of your secuirties and dematerialization of shares.

You may have come accross the term dematerilization several times when it comes to modern system of online share trading, but if you haven’t then by having a depository account, your paper shares will get converted to the electronic realm and every transaction made i.e. buying and selling of shares is purely digital and done through the fully automated stock exchnages like the BSE or NSE.

The broker in regards to online share trading or opening of a depository account, is the key to your success, as your dematerialised shares will be held in a depository, governed by the NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Securities Ltd.)

Your broker is a registered agent or a Depository Participant (DP) of the NSDL or CDSL, enabling you to hold your securities in your depository account. It is essential that you choose a DP who is a recognised name in trust and performance. As your broker will be responsible of your time and money. Make sure that your broker has a good track record of offering the latest trading platform and that you can execute trades and do so via multiple screens and that you have the stop loss option to avert potentially threatening losses down to a minimum.

With most of the brokers available you can make a phone call to place an order or you can place an order online. And your broker on your behalf will  facilitate either buying or selling of shares, provide market intelligence with the help of years of analytical research, live updates, charts on market movement and statistics of each and every stock you are interested in. So if you have done your homework in sharemarket in India and ready to take a leap in online share trading, then subscribing to a broker and opening a depository account is the first thing that you must do.  

Share trading and opening a demat account

There is no thumb rule to gain huge returns from a stock or determining the direction, as to where the stock market is headed. There are a few principles or rules that will help you in making the right choices in share trading.

Never expect to put your money on a winning stock from sources like investing experts, close ones or rumours surrounding the market. Ones or twice such market tips may prove useful, but it will seriously limit you in being a successful investor, as investing is done through research and analysis of stocks and the market. Luck has never helped anyone in achieving success in share investing.

Investors generally like to cash out their investment which has doubled or tripled in appreciation and keep stocks which are going down in hopes of a revival. But to be successful, you have to be different. To be a long term investor, you should check your temptation of selling performing stocks and try to ride on a winner to seek long-term benefits and quit holding non-performing stocks and risk your stocks to plummet further, making it completely worthless. You should always invest and make choices rationally and not by hope or greed.

A demat account comes first in line when it comes to share trading. A demat account is almost synonymous to trading and it can now be easily opened with a stock broker. A stock broker is a financial intermediary along with others like a bank who are entitled to open a demat account for you through a central Depository like the CDSL (Central Depository Securities Ltd.) and NDSL (National Depository Securities Ltd.)

Different brokers offer a wide variety of stock trading services to their customers. It may include requesting order executions online, call and trade facility, in which you can also place your order if you are not online. Expert analysis on the market, live updates, advisory services etc.

Some of the documents you need to open a demat account are as follows:

     1)      Photocopy of your PAN card.

     2)      Residence proof (Driving license/passport/ration card etc.)

     3)      6 months bank statement.

Opening a demat account and trading in shares has never been so simple. Just fill out a simple form and provide all the necessary documents required in opening a demat account and then you can start investing and create wonderful financial opportunities.