How To Open A Free Trading Account Online
If you are looking forward to doing trading online, it is always advisable to do it via equity investment rather than directly via stocks. However, the scenario has changed over the past two or three years, especially after the market started rearing its head post lockdown. Investors have begun investing more heavily in the stock market. According to the reports, around 3.76 million Demat accounts were created in the past year. So if you are interested in earning money by trading online and investing in shares, opening a free trading account in India or an online brokerage account is a must. This article has got you covered in every way so that you can set up your account and earn big. Let’s get started-
Get hold of a broker
It is the first step for doing trading online. It would help if you got hold of any intermediary who can regulate or open your brokerage account. Nowadays, almost all banks offer the same benefits on trading accounts, so you need to identify the brokerage firm. Hem Securities offer the best services in such situations. They offer both discount brokership and service brokership. Here is the primary difference between the two brokering categories-
Discount Brokership – It carries out the investor’s trading decisions and helps manage and offer equities derivatives but charges a flat fee on your profits of deals.
Service Brokership – It provides options to invest in IPOs, mutual funds, and insurances.
Besides them, there are HDFC securities, ICICI direct, Axis Direct and Zerodha, which offer similar services at various rates. Of course, while choosing the right firm for your investment, you have to go through their scheme related documents and make sure to invest in one that offers minimal charges with maximum returns.
How to open up your trading account
While opening your free trading account in India, you need two other accounts- a Demat account and a bank account. Nowadays, Demat and trading accounts are almost synonymous. Still, more technically, one is different from the other because the Demat account stores record of your transactions or securities in digital form, but a trading account helps you invest additionally in stocks, IPOs, mutual funds and gold bonds, all of which will get recorded in the Demat account.
Particulars of Demat account
Demat accounts can be of two types, or rather the securities held in there will be of two kinds. The depository party can either have national security deposits or central service deposits, depending on the nature you are interested in. There isn’t any essential difference between the two except that the former is held by National Securities Depository Ltd (NSDL) and the latter by Central Depository Services India Ltd (CDSL).
Steps to follow
- First and foremost, if you want to open a trading account, you need to sign the PoA or power of attorney in physical format. You also need to show original valid identity proofs like Aadhar, KYC form, pan card, driver’s license, or voter card. These have been prescribed by the regulatory guidelines but are subject to changes in the future.
- The second step would be to identify the fund flow in a 3-in-1 account. Funds need to be transferred from your savings account in the bank to your trading account, which its own unique identity will characterise. It will be your identification mark for all the times later to this when you trade or buy and sell securities.
- The Demat account will record the actual number of shares you or your credits have purchased. It functions as an intermediary from where claims can be sold off or bought and deposited.
Opening up Demat account and trading account together
Opening up a 3-in-1 trading account for seamless trading is always advisable. It means linking all your accounts to the same institution or bank since, in case you choose to open at different locations, you may lose out on future investment opportunities while transferring funds from here to there. Often it may lead to you losing out on interest earnings in your savings account. Furthermore, if you tend to transfer shares from your Demat account for trading against collaterals, you might incur many hassles.
Having a joint DIS slip for all your transactions is helpful since, otherwise, every time you transfer shares to a broker, you will have to sign the DIS slip and get it approved. All this makes the process quite a time consuming and tedious. In case of delay in transfer of funds, the shares may further get auctioned off and result in losses.
This step is of primary importance. The fees and brokerage charges play an essential role in making your financial decision with any financial service. These charges include opening fees, annual maintenance fees and transaction costs. Most brokerage firms charge a percentage of your shares purchased, while others charge a flat fee on the profits or transactions made. One needs to be cautious about the various one-time or recurring charges, especially those which can vastly differ between brokers.
Moreover, it should be borne in mind that you will be charged for each transaction, so your trade decisions and investment costs should also include these. Broking agencies offer various pricing plans for your equity investments and all of these need careful deliberation.
So, which company should you go for?
Hem securities is undoubtedly the best brand of brokerage services if you are interested in opening your Demat account. They offer dual discount and service brokerage services, all at minimum cost. If you are looking for a cost-saving and reliable experience irrespective of whether you would be a short term or long term investor, then this is your go-to company. They have a team of highly trained professionals who offer expert solutions and trend-based analysis and forecasts about the market. Remember, if you are looking forward to investing in equity for the long term instead of short-term gains, it could prove to be risky. Hence shares of stocks should instead be held on to while market speculation is going on, only to disband the same if and when the market is on an upswing.
These are all the necessary details to consider while opening up a trading account. Go through this carefully before investing in any particular brokerage firm or agency.