The stock market has walked through a harsh phase due to global lockdown. Financials are now turning the corner. There is so much liquidity around the equity capital. Global growth is supportive, and RBI rates are supportive. Analysts are seeing it as the time for a decent growth number. It is amplifying the interest of investors going further with the stock investing.
To enjoy the liquidity and earnings growth during this abundance in the market, besides skills of online trading, you need a demat account and trading account that are the primary requirements for online trading. Let us explain how to create demat account and the functions of these accounts before skills that you require.
Demat Account Functions
A demat account is an online repository for financial securities in electronic form. The demat account facilitates holding different financial securities. Whether you invest in stocks, bonds, mutual funds, exchange-traded funds, or commodities, you can keep them in your demat account. The securities you buy gets credited to your demat account, and that you sell gets debited from it. Demat services are provided by the depository participants (DPs) authorised by the central depositories, the CDSL, and the NSDL.
A demat account facilitates:
- Quick discovery of the price of any security.
- Online secured securities without risk of losing, damaging to the physical certificates, forged or fake shares.
- It has fastened the clearing and settlement of transactions.
- Eliminates the
- Cost-efficient investing.
- You can open an online demat account with minimal paperwork.
- Make changes in your details, like the address filled in the account opening form, without connecting to every company where you have invested.
Trading Account Functions
A trading account is required to buy or sell securities in the stock market without visiting a stock exchange. Previously, it was a hectic task when the stock exchange functioning was based on the open outcry system. Now you need not be involved in verbal communication to complete your buying/selling trades.
A trading account is a link between your demat account and your bank account. To make buy transactions for securities, your trading account will be funded using your bank account, and after successful trade execution, securities will be reflected in your trading account.
With a trading account, stockbrokers offer the following benefits:
- A trading account is a one-point access to various stock exchanges.
- Investors can perform technical and fundamental analyses of securities using the analysis reports provided by the stockbroker.
- It is a flexible account that can be accessed to place trades from any corner of the world.
- A trade can be completed with seamless transactions.
How to create demat account and trading account: You can open both accounts together with a registered broker by following the online procedure. Access the account opening form at the broker’s portal, fill-in and submit with required documents. Stockbrokers need your PAN card, ID proof, address proof, income proof and your passport size photos in digital form.
Basic Skills Required for Stock Trading
- Research: There is a lot of analysis involved in trading. Therefore, traders need to find all the relevant data that shows the impacts of different constituents on the securities.
- Analytical Skills: Traders should know how to understand indicators and patterns for analysis and how to recognize trends.
- Decisions on sectors: You need to find out the best sector for you based on your experience and knowledge. It can deepen your understanding of the stock market.
- Emotion-free trade: A trader needs to control emotions. It is necessary to prepare a trading plan and stick to it to ensure emotion-free trading decisions.
Thus, open your online trading account to explore opportunities in the stock market. With continuous efforts, you can improve your research and analysis abilities. With time, you will be paid off in better trades.