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.

Cross barriers and open new possibilities with Demat Account

During the last decade the stock market had transcended to electronic trading and the usage of paper certificates of shares has become the thing of the past as the maintenance of paper shares for trade and settlement is very cumbersome. The demat account has become an absolute must for online trading and now an investor can expand his portfolio to commodity and currency along with other securities.   

If you want to participate in an Initial Public Offering (IPO) and have a piece of the pie then you must open a demat account and have all the knowledge related to this process. A demat account is like a depository that holds your shares electronically. There are two apex depositories in India the National Securities Depository Ltd (NSDL) and the Central Depository Services Ltd (CDSL). And there are over a hundred Depository Participants (DPs) in India and they act as agents for the NCDL and CDSL are empowered to open demat accounts for their customers.

Just like opening a savings account with a bank you will have to open a demat account with a stock broker of your choice. In the demat account your physical shares will get converted to electronic form and every purchase and sale transaction of shares and securities are will be involved with will be done through the stock exchanges BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). Where you will have the privilege to invest in the stock of some of the big players with large market capitalization listed in the stock exchange. 

We will now discuss on the documents you will need to open a demat account with the help of your broker – 

•    By mandate of SEBI a trader has to submit a copy of their pan card and they should produce the original  at the time of verification.
•    Proof of residence and identity has to be duly produced to your broker.
•    You will need passport size photographs. 

Your broker will provide you the demat account opening form and after you had fully signed and attached the required document for account opening then within a short period your account will be ready for you to start trading in the most dynamic wealth creation avenue of trading in the stock market.
 

Trading Account for Unlimited Benefits in the Capital Market

A trading account gives a mighty hand in facilitating a smooth and safe way of sale and purchase of shares and stocks.

Trading manually is fast becoming a thing of the past and is being pushed further away by online stock trading. Paper based instruments had inherent problems and with the expansion of the Indian capital market, the magnitude of large scale trades and settlements, were making it impossible to manage as long as trading in stocks and other securities were being conducted using shares.

India then moved on to demat system, in which bookkeeping is done electronically, where shares and securities are de-materialised and are held and the buying and selling of shares became very easy and risk free, thus invalidating the hassles and problems associated with physical share certificates.

From then onwards, demat account has been synonymous to online stock trading. To open a demat account you need to approach a Depository Participant (DP), and they are the banks, financial intermediaries, stock broking firms etc. who will hold securities and shares on your behalf electronically. Your DP will also provide you with a unique number called BO ID (Beneficiary Owner Identification Number), which will be required at the time of transaction. 

However, a demat account’s function is to hold and transfer of shares and securities, but to actually initiate transaction of sale and purchase of shares, you will have to open a trading account. All you have to do is mention the name of the company from whom you want to buy or sell your shares and the price agreed by you. Then you can contact your broker by online placement of order or calling your broker over the phone, and the broker in turn executes your order on your behalf. After a transaction is completed, your shares will get either debited or credited to your demat account.