How to start trading... Some tips
Want to know how to get started with trading? Here you go...
For trading in the Indian equity market, the most best way is to open a Demat account with a depository participant. To understand what's a DP, first we need to know what is a depository. A depository is simply a place where shares or equities are held in an electronic form. A DP is simply an agent to the depository. Example of a DP is icicidirect, sharekhan etc., and listen DP is different than Broker Firms that allows trading. But normally these firms does the both.
In the old days, if you own, let's say 100 Wipro shares, you will get a physical certificate as a proof of owning the shares. The problem with paper is that it is susceptible to the risk of getting damaged, lost, stolen and many other risks. Imagine the convinence of digital format: all you need is an internet connection to see what you own.
The documents which are mandatory for opening a demat account with a DP are:
1) PAN card
2) Passport (or any photo identification)
3) Address Proof (telephone bills, bank statements etc.,)
4) Two passport size photos
Unlike the traditional bank accounts that requires a minimum balance, demat account does not need any minimum balance of shares. You can start with 0 shares. However, there is an annual maintenance fee and it varies based on the DP who is offering it.
Whenever you sign on the papers of Demat A/C you also sign on the papers of trading account. A trading a/c is where you will trade (buy/sell) your shares.
Any trading account is generally attached to a current or savings account in the back-end. This is the account from which money is used for buying or selling shares. Try attach the best bank that you can readily transfer the money from and to the trading account like ICICI Bank or HDFC Bank etc. otherwise you will have to use the "cheques" for transferring money from your trading account.
Now that you have an demat account and trading account, a word of caution: Don't get carried away by the success stories such as people making so much money in the stock market etc.. Do your own research before investing/trading in stocks. If you don't do your homework, you may lose your hard earned money. Remember, in Dalal street, there is no mercy.
Bye...
For trading in the Indian equity market, the most best way is to open a Demat account with a depository participant. To understand what's a DP, first we need to know what is a depository. A depository is simply a place where shares or equities are held in an electronic form. A DP is simply an agent to the depository. Example of a DP is icicidirect, sharekhan etc., and listen DP is different than Broker Firms that allows trading. But normally these firms does the both.
In the old days, if you own, let's say 100 Wipro shares, you will get a physical certificate as a proof of owning the shares. The problem with paper is that it is susceptible to the risk of getting damaged, lost, stolen and many other risks. Imagine the convinence of digital format: all you need is an internet connection to see what you own.
The documents which are mandatory for opening a demat account with a DP are:
1) PAN card
2) Passport (or any photo identification)
3) Address Proof (telephone bills, bank statements etc.,)
4) Two passport size photos
Unlike the traditional bank accounts that requires a minimum balance, demat account does not need any minimum balance of shares. You can start with 0 shares. However, there is an annual maintenance fee and it varies based on the DP who is offering it.
Whenever you sign on the papers of Demat A/C you also sign on the papers of trading account. A trading a/c is where you will trade (buy/sell) your shares.
Any trading account is generally attached to a current or savings account in the back-end. This is the account from which money is used for buying or selling shares. Try attach the best bank that you can readily transfer the money from and to the trading account like ICICI Bank or HDFC Bank etc. otherwise you will have to use the "cheques" for transferring money from your trading account.
Now that you have an demat account and trading account, a word of caution: Don't get carried away by the success stories such as people making so much money in the stock market etc.. Do your own research before investing/trading in stocks. If you don't do your homework, you may lose your hard earned money. Remember, in Dalal street, there is no mercy.
Bye...
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- How to start trading... Some tips (16th September 2007)
