How To Trade Online Demat Account

Essentially there are two types in Trading Online.

One is Trading in Shares. the other one being Trading in Commodities.

While in the former you buy and sell shares , in the latter you buy commodities like Cereals etc.

How to Trade Online Trading in Shares.

1.You have to open an online Trading account also called Demat Account?

Demat stands for dematerialization. Dematerialization is the process of converting physical financial instruments such as share certificates, mutual fund investments, and bonds into electronic form. A demat account is similar to a bank account. When you receive your bank statement, you will see 2 columns – deposits and withdrawals of money and balance money in the account on the last day of the statement. Similarly, a demat statement will show the investments you have bought, sold and the balance investments held on the last day of the statement.

Now you may wonder – where do I open a demat account? That’s easy. When you want to buy equity shares, you approach your bank or an equity share broker. The broker will open the demat account for you along with the brokerage account. When you buy and sell securities, the broker will have the securities deposited into or moved out of the linked demat account. You will also need to link your bank account to the brokerage account for transfer of funds when you buy and sell shares, and for payment of related costs.

If the broker is a depository participant (who is authorized to open and maintain demat accounts), the broker will open your demat account and maintain it in-house. However, if the broker is not a DP, your demat account will be opened with a DP the brokerage house is associated with.

You may ask – but why has demat been introduced? To answer your question, take a look at the benefits arising from demat:

Holding your investments in demat form is easy and convenient.

• You don’t have to face the problem of losing investment certificates or receiving forged certificates.
• Transferring securities becomes easy.
• You incur lower costs associated with transactions when compared to physical buying and selling of securities.
• You receive bonus shares and share splits automatically.
  • Fill in an account opening form for broking service and for opening demat account.
  • Sign a DP agreement and Power of Attorney permitting the DP to transfer shares in and out of your account when you buy and sell.
  • Complete the KYC requirements for which you need to provide your identity and address proof and cancelled cheque of your bank account which you want to link to your broking and demat account.

  Once the account is opened, the DP will give you a client id (very similar to a bank account number).

• Now you can start Trading in Shares.
• Ensure that you do not become greedy.
• Watch the SEBI prices of stocks Daily and decide for yourself which stocks are raising steadily, the background of the Company, promoters.
• Do not go in for very highly raising stocks to begin with,You can do that after you gain some experience.
• Till then trade in established Stocks and quit when you get a return of 15-20% return on your investment.
• Start with an investment of Rs 1000 or 2000; as you gain in confidence and experience you may start investing more.
• In the case of fast raising Stocks, sell when you get a maximum of 50% Profit , this is safe.

Trading Online Through Brokers.

• Fill in an account opening form for broking service and for opening demat account.
• Sign a DP agreement and Power of Attorney permitting the DP to transfer shares in and out of your account when you buy and sell.
• Complete the KYC requirements for which you need to provide your identity and address proof and cancelled cheque of your bank account which you want to link to your broking and demat account.

Once the account is opened, the DP will give you a client id (very similar to a bank account number).

http://en.wikipedia.org/wiki/Investing_online

Reference:

http://www.itsallaboutmoney.com/equities/demat-what-is-that/?gclid=COX617u6rroCFfFg4godnEMAYA

Related Articles

• Earn Safely (solutionscase.wordpress.com)