Stock Trading in India Beginners – Basic Requirements
There are some basic requirements that need to be in place before an individual can begin to buy, hold and sell the stock. This document is the basic guideline for interpreting these requirements. Please note that this document does not provide any advice as to what stocks to buy or what investment strategies are suitable for the individual.
* Dmat Account
* Trading Account
* Bank Account
Similar to a bank account, the difference is that the Dmat account holds shares instead of cash. Therefore, if the shares are bought, they are deposited into the buyer's Dmat account, and if the stock is sold, they are accordingly reduced from the Dmat account. The stock that is deposited in the Dmat account or reduced from the Dmat account is the electronic stock. For individuals wishing to trade in stocks, only Dmat (non-material) stock trading is mandatory. Physical stocks can not be traded. Dmat's stock has many advantages in terms of handling, etc.
Dmat accounts can be opened through most banks and financial institutions after filling in the required forms and providing proof of identity and address. The usual cost associated with a Dmat account is:
1. Account Opening Fee
2. Annual cost of maintaining a Dmat account
3. Periodic Charges for Shares in the Dmat Account
4. Other service charges according to the transaction. Usually, there is no transaction / service charge when buying stocks.
The above charges may vary from service provider to service provider, but may vary significantly with regulatory bodies such as the Securities and Exchange Commission of India (SEBI)
] If an individual wishes to trade, that is, stock trading on a stock exchange, a trading account is required. India's two major stock exchanges are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). You can also open a trading account with most banks and financial institutions once you have completed the required form and provided proof of identity and proof of address. The actual transaction can be by telephone, the Internet or use the account opened at the time of the transaction. Personally, I find it convenient to use the Internet for business. There are options to specify the price to buy or sell, it is easy to track online.
There is a brokerage fee for buying and selling stocks. The cost varies from one trading company to another.
Needless to say, bank accounts require a variety of financial transactions related to financial transactions. This is where the amount of the stock sold will be credited or where the amount of the purchased stock will be deducted from it.
Once a Dmat account, a trading account, and a bank account are in place, a person is ready to start trading. While there is no need to have Dmat accounts, trading accounts, and bank accounts in the same organization, I think using the same organization provides additional convenience, especially for individuals who use Internet transactions.
Buying stock: When an individual wants to buy a stock, he or she logs on to a transaction in which he / she enters a transaction, such as a bank account, a bank account, or a bank account. Account and specify details such as company name, no. Of the shares and the purchase price. Based on this information, the required amount in your bank account will be reserved for this transaction. When the desired price is reached, the transaction is executed and the amount (after the adjustment fee) is deducted from the bank account and the stock is credited to the Dmat account.
If the bank account is different from another organization, the amount must be moved to the trading account in order to make the transaction
Sell the stock: When an individual wants to sell a stock, he / Account, and specify the details, such as company name, no. Of the shares and the sale price. Based on this information, the amount of stock required from the Dmat account is left for this transaction. When the desired price is reached, the transaction is executed, and the stock is deducted from the Dmat account, and the amount (after the adjustment fee) is credited to the bank account.
If the bank account is related to another organization, the amount of the trading account must be moved to the bank account after this transaction
Please note that, in addition to the fees, the Bank, Dmat account service provider and trading account Service providers, there will be additional government taxes such as STT and service tax. In addition, before opening any account, be sure to read all the terms and cost details of the service provider and understand the transaction costs involved in each transaction. Happy Trading!