How to open a demat account and start trading
Are you looking to invest in the stock market, but don’t know how to get started? Opening a demat account and trading stocks is easier than you may think. In this blog post, we’ll walk you through the requirements for opening a demat account, as well as the process of trading stocks. We’ll also highlight the benefits of having a demat account and trading stocks. By the end of this blog post, you’ll be ready to start investing in the stock market How to open demat account!
The requirements for opening a demat account.
To open a demat account, you will need to submit the following documents:
1)Proof of identity (POI): Passport, PAN card, Voter ID card, Driving License, NREGA Job Card
2)Proof of address (POA): Passport, Utility bills not older than 3 months old, Property tax receipt, Lease agreement or Rent agreement
3)Income proof: Last 3 months’ salary slips or Form 16
4)Bank details: Cancelled cheque or bank statement
5)Investment declaration form: This is a self-declaration form stating your investment objectives and risk appetite.
The process of opening a demat account.
The process of opening a demat account is as follows:
1)Submit the duly filled application form along with the KYC documents at the nearest Axis Bank branch.
2)You will be required to maintain a minimum balance in your savings account linked to your demat account.
3)Once your application is approved, you will receive an Investor Identification Number (ININ).
4)Now you can start trading!
How to start trading with a demat account.
After opening a demat account with a SEBI-registered broker, the investor has to deposit money in his/her account which can be used to buy or sell securities. Buying and selling of securities are done through the stock exchange where the trade is executed.
For example, if an investor wants to buy 10 shares of ABC Ltd., he/she places a buy order with the broker who in turn places the order on the stock exchange. The order gets matched with a seller on the stock exchange and the trade is executed. The number of shares and price at which the trade is executed is communicated to both parties i.e., buyer and seller by their respective brokers and stock exchanges.
The shares purchased are then credited to the buyer’s demat account while cash gets debited from his/her account. Similarly, when an investor wants to sell shares, he/she has to place a sell order which gets matched with a buyer on the stock exchange, and trade is executed accordingly Download Trading App.
The types of trades that can be placed.
There are two types of trades that an investor can place – intraday and delivery. Intraday trades are those where positions are squared off before the end of the day i.e., all buys are offset by sells or vice-versa, and no position is carried overnight. On the other hand, delivery trades are those where positions are not squared off before the end of the day and investors take delivery of securities purchased or sold by them. Delivery trades have higher brokerage charges as compared to intraday trades as they involve the transfer of securities from one demat account to another which attracts transaction charges as levied by DP’s [Depository Participant].
The benefits of trading.
Trading has many benefits like liquidity, easy entry, and exit, price discovery, etc. Liquidity refers to the ease with which an investor can buy or sell shares. For example, if an investor wants to buy shares of XYZ Ltd., he/she can do so by placing a buy order with the broker who will execute the trade on the stock exchange. Similarly, if the investor wants to sell his/her shares, he/she can place a sell order which will be executed by the broker on the stock exchange. Thus, trading provides liquidity to shareholders as they can easily buy or sell their shares.
Another benefit of trading is that it provides easy entry and exit to investors. Unlike other investments like real estate where an investor has to bear huge losses in case he/she wants to exit before completion of the project, in the case of shares, an investor can exit any time he/she wants by selling his/her shares on the stock exchange. Moreover, unlike other investments like mutual funds where there is a lock-in period, shares can be bought or sold any time an investor wants.
Price discovery is another important benefit of trading as it helps in the efficient allocation of resources. Price discovery refers to the process by which prices of securities are determined on the stock exchange. It helps in the efficient allocation of resources as it ensures that price signals are transmitted quickly from one market participant to another thus helping them take informed investment decisions.
A demat account is a must-have for anyone looking to trade in India. It’s a simple and convenient way to keep track of your investments, and it offers many benefits. If you’re thinking about opening a demat account, here’s what you need to know.
The requirements for opening a demat account are fairly straightforward. You’ll need some basic documents, like your PAN card and proof of address. The process of opening an account is quick and easy, and once you’re up and running, you’ll be able to take advantage of all the benefits that come with having a demat account.
When it comes to trading, there are a few things you need to know. The process is fairly simple – you just place your order and wait for it to be executed. There are two types of trades: buy and sell. And finally, there are several benefits that come with trading, like the ability to make money from the comfort of your own home.
So there you have it – everything you need to know about opening a demat account and starting to trade. All that’s left for you to do is get started!