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.
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