Technology has made our day-to-day activities convenient by reducing the time and cost involved. Trading shares was only possible through the physical transfer of share certificates in the past. Today, all stocks and securities trading can be done online. Online trading has increased the volume of investors all over the world. Holding digital assets in the form of a Demat account is secure with zero risk of loss or theft.
Why Online Trading and Demat Account Opening are Useful
Investors should always be careful about the risk and returns from investments. Buying or selling shares has many risks involved. Risks with the physical exchange of shares include damage, theft, misplacement, and more. As the exposure of Demat accounts to third parties is nil, the risk is reduced.
Reduces Fraudulent Activities
Physical share trading has the highest risk of fraud. There are many cases of forgery of financial documents which made investors lose their life savings. Online trading does not provide an opportunity for such fraudulent activities.
When making any purchase, the cost is the first-factor one considers. An investor must find ways to reduce costs while investing. One must open a Demat account to cut down the additional cost of trading share certificates. Buying paper stock shares has handling and brokerage charges. Unlike the transfer of physical securities, a Demat account does not involve hidden charges.
Paper stock shares demand more time and multiple middlemen while trading. However, a Demat account is linked to your trading and savings account. It reduces the time and facilitates a seamless transaction. Accessing all the investments in one spot makes investments hassle-free.
Sharemarket trading requires continuous monitoring by the investors. Checking the profits or losses from stock market trading helps investors have more control. For investors interested in day trading or any other type of online trading, a Demat account is a must.
How to Open a Demat Account Online?
Online trading takes place instantly like most online transactions. However, there are multiple steps involved in opening a Demat account. All the documents must be carefully submitted so that stock trading is seamless.
Choose your Depository Participant (DP)
The most suitable Depository Participant should be chosen by the investor to open a Demat account. The DP can be a bank or any other financial institution registered under the Securities and Exchange Board of India (SEBI). Any financial institution registered under SEBI is allowed to be a DP. Every Depository Participant is assigned a unique identification number.
Upload Necessary Documents
You must submit personal details to create an account. Personal information includes name, phone number, and residential details as provided in Permanent Account Number (PAN).
Add Bank Details
As mentioned before, a Demat account is linked to a savings account. Provide your bank account details like account number, type, and IFSC code. Bank details are required to transfer dividends and interest received.
E-Sign and KYC Verification
Electronic signing is done for the verification of the account holder. KYC verification links Aadhar to the Demat account. It is important to secure an account.
Submit the Application
Once all the details are submitted, verification is complete. It is the last step of opening a Demat account. After submission, the Demat account will be successfully created and login details will be sent to your phone number or email ID.
How Does Online Trading Work?
An investor can trade in securities through the primary or secondary market. The primary market lists Initial Public Offering in the stock market. After the new shares are sold in the primary market, they are traded in the secondary market. There are different types of stock trading: day trading, swing trading, long-term trading, short-term trading, and more. Investors can choose any trading method depending on their convenience and financial goals.
Through online trading platforms, investors can also analyze the market and invest in shares as per the market fluctuations. In the traditional method of trading, investors had to call the broker and make inquiries to know market conditions. Online trading allows investors to place and complete the order themselves without any middlemen.
Online trading is a simple, time-saving process. Anyone with a Demat account can become an investor and start trading securities from anywhere in the world. Before purchasing any shares online, understand the workings of the stock market in India. Once the steps to invest are clear, online trading becomes a lot more profitable and secure source of income.