Online trading has gradually become the most convenient medium to trade for every trader who is eager to exercise more control on the returns on histrading and investment. Nowadays, a majority of the stockbrokers offer online share trading options to their clients, while also offering training courses for novice traders or beginners in stock market. Regardless of whether you’re a seasoned share market trader or you’re newbie, a Demat account is something that you need to get acquainted with.
A Demat account is a shortened form of the phrase ‘dematerialised account’ which is a digital or paperless process of selling and buying not only stocks or shares but also other financial assets. For trading in stocks in India, it is mandatory that you have an online Demat account. Any trader who wishes to get involved in the buying and selling of stocks should open a Demat account. Before you open a Demat account, here are a few things that you should check.
Important features of Demat accounts
Annual fee, brokerage charge, and other added charges: As the name suggests, an annual account maintenance fee is charged once in a year or quarterly and this fee can range from Rs. 500 to Rs. 2000 according to the preference and services offered by your broker.
Brokerage charge is the amount that you must pay each time you sell or buy the stocks of a company. It is either a fixed amount or a percentage of the sale or purchase value. For instance, if the broking fee is set at 0.5%, you’ll have to pay 50 paise each time you purchase stocks of Rs. 100. Moreover, there are other additional charges for investing in mutual funds and other derivatives trading.
Other than this, the DP levies Demat charges to process any request to dematerialize the shares/stocks from certificate or paper format to online mode. Other than this, there are some DP’s who can charge other miscellaneous fees like physical statement charges, account administration charges, and advisory fees wherever applicable.
The online trading account is of utmost importance
In order to do regular online trading, just opening a demat account is not enough. It is also important and mandatory to open an online trading account with a stock broker who is registered with the stock exchanges. The trading account is the account from which the client can place a trade and where all the debits and credits are managed. The trading account has to be linked with the demat account and the bank account of the client to facilitate easy transfer of stocks and funds. If you want to get into serious trading and investing activities, it is extremely important to consider the features/speed of the online trading account and research and advisory, rather than just focussing on the brokerage charges levied by the stock broker.
Other supportive features of a good online trading platform
Below are some of the good features that are offered by goodonline trading platforms:
- Real time prices of stocks/contracts
- Financial history, data, vital events, and in depth analysis of the company
- Option to create multiple watch lists to help you track events, stocks, and prices
- Transaction history of your sell and buy activity for any specific time period
- Present portfolio value, purchase price and gain loss of your portfolio
- Bid and ask price for any particular stock
- In depth update on the capital gain loss booked for the year
If you are a new investor, avoid being too obsessed with the volatility or too much price movements in stocks. As a rule of thumb, the prices of companies are bound to change every second due to supply and demand changes of the stock. As an investor you should always focus on long term goals and not get emotional with the short term price movements
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