A demat account can help you trade seamlessly in several market-linked segments. However, you need to avail the assistance of an online broking platform or DP to open a demat account. A demat account holds your securities in electronic format. You can also buy and sell securities from a demat account as a trading account is linked to it. You need to provide these documents for opening a demat account with an online trading in India:
- Identity proof: Driving licence, passport, Voter’s Id, PAN Card, or Aadhaar Card, can be submitted to validate your identity while opening a demat account.
- Address proof: Electricity bill, water bill, ration card, telephone bill, passport, or bank account can be submitted to validate your address.
Along with these documents, you need to submit financial documents like salary slips, Form 16, and passport sized photographs. Though it is necessary to go through an in-person verification to complete the verification process, some brokers allow you to complete this process through online video verification.
It is necessary to keep all the documents ready because many brokers offer a simple online process to open a demat account. The simple online application process allows you to open a demat account within a few minutes. However, the verification process might need extra time and your demat account will be activated within a couple of days.
Once you submit the application form and documents and complete the necessary formalities, you will be assigned with a unique 16 digit beneficiary ID. Along with that, the login details will be sent on your registered email address and mobile number. You can login in your demat account and start using it for trading and investment purposes. As a beginner, you can adhere to these guidelines and tips while trading:
Knowing the basics of stock market
Knowing the basics of the stock market is important before taking any trade. The basics include how stocks, mutual funds, currencies, and other securities work. Understanding the fundamentals of stocks to evaluate their value is also important to make a profit without taking too many risks.
Like any other types of instruments, market-linked instruments also provide good returns if you diversify your investment portfolio smartly.
For instance, if you are interested in trading in both delivery and intraday trading, you must know how to identify the best performing stocks in the market. The average monthly movement can be one way of figuring out the recent performance of a particular stock.
However, as the market is influenced by a variety of geopolitical, economic, and other factors, you must be updated with the latest international and national affairs and important events.
After figuring out the best stocks for trading or investing, you can purchase them. Ideally, you should not purchase stocks in bulk unless it is performing really well. Keep monitoring the movement of the stock prices and buy some stocks after every significant movement in its price. It will help you to average up the moving prices in such a way that any movement in the upward direction earns you a decent profit.
Compare the demat charges
A demat account is associated with several chargers like AMC, brokerage or transaction charges, transfer fees, custodian fees, etc. You should know about all these charges in advance. Also, comparing the demat charges of multiple stockbrokers before opening a demat account will help you to save brokerage and earn high profits.
(Note – This article is not written by the editorial team at Fox Interviewer, nor by the Author)***