Online trading is an interesting option to choose when you wish to multiply your wealth. The broader spectrum and the wide array of different shares of different companies have inspired millions of people to start online trading.
Although this may seem interesting that investing a sum of money into the stock market can lead to profitable gains, yet, there are a number of processes which one should be aware of before they can actually begin with trading.
How To Start Buying And Selling Shares Online?
Traditionally, trading was a difficult and cumbersome process. Keeping in touch with the brokers was very difficult due to the lack of proper communication systems. But nowadays, due to the advantage of digital transactions, online trading has become a trend and is continuing to expand. Here are the stepwise instructions on how to master the art of online trading:-
Do Your Research Well
This is the foremost requirement for trading. Proper research to understand the basics of the stock market prevents failures and risks. Also, keeping short-term investment goals enables one to gain control over the process and thus paves way for better and consistent investments.
Look for a reliable depository participant or broker
Any individual interested in buying stocks cannot do so on his own. He or she needs a broker or depository participants registered with the Securities and Exchange Board of India under the two depositories namely- National Securities Depositories Ltd. (NSDL) and Central Securities Depositories Ltd. (CDSL). Make sure that the depository participant/ broker you hire are trustworthy enough to manage your accounts.
Open A Demat And A Trading Account
Nobody can perform online trading using their savings account. An online Demat account is required for the same. Demat accounts serve as those accounts which convert the assets of an individual bought from the market in electronic form and hold them for future transactions.
Trading accounts serve as the platforms from where actual trading occurs. All the debits and credits for buying or selling stocks are done by trading accounts from the Demat accounts. If you are wondering how to open Demat account online, then beginners can go to the website of any brokerage firm and apply for a Demat account. Usually, there are no Demat account charges for opening Demat accounts which hold assets worth Rs. 50,000, while those accounts which have assets ranging from Rs. 50,000 to 2 lakhs, there is a nominal fee.
Requisition of UIN
UIN is a Unique Identification Number that is allotted to every trader who trades over the limit of Rs. 1, 00,000, or above. There are many investors who buy shares of high profile companies. For them, UIN is essential. However, for transactions below the capital amount of Rs. 1, 00,000, UIN is not required.
Select Which Stocks Work Best For You
This is a very significant step as the decision of choosing stocks lies entirely on the trader and any wrong decision can make them lose chunks of money. Here are a few tips as to where to invest to gain maximum profit:-
- Select stocks that experience price fluctuations every day.
- Go with the current market trend.
- Don’t invest in volatile stocks.
- Always prefer liquid stocks.
- Analyze the stocks, identify the index, and make a list of the several stocks from different sectors.
- Diversify your profile by adding different stocks.
After ensuring that all the above steps are fulfilled, anyone is eligible to buy or sell shares. In India, there are two trading exchanges- Bombay Stock Exchange BSE and National Stock Exchange NSE. Beginners can ask their brokers to guide them about which exchange they should invest at. Also, before you start off, watch the market trend carefully and then inform the broker to buy the number of shares required and the price at which you wish to buy. As soon as the share reaches the order price, buying or selling of shares can be done. To sum up, online trading is easy but needs a carefully planned approach.