Stock trading is one of the the most effective ways to earn long term wealth by making smart investments in equity. While you may be advised multiple times to invest in online share trading, there are chances that you are completely clueless about how to start online trading. Here is are 3 basic things that you need to know as a first-time stock market trading. Let’s start by understanding details on how to open an online trading account and how to do actual online trading.
How to open an online trading account?
Just like opening a trading account with an equity broker, you need to fill up a form and sign to confirm clauses and submit required documents. To open an online trading account, you need to submit 3 kinds of documents,
- PAN Card,
- Proof of identity with your photograph like a driving license, Aadhar card, passport.
- Proof of Address like landline bill, electricity bill, water bill, etc.
In case, you don’t have a PAN card, you can apply for a PAN card and affix a copy of Form 49 acknowledgment.
On submitting the form with these supporting documents, the broker will verify the document and open your trading account within 2-3 days. Usually, a Demat account is opened along with the trading account. According to SEBI, the recently permitted clients can open an online trading account in India just by using an online KYC facility through Aadhar authentication. With this, you can open a trading account in just a few minutes.
It is very common to be called by brokers for in-person verification over a video conference or visiting the nearest authorized point. Once it is done, you are good to operate stock market trading through your trading account.
How to start actual online trading?
Once your trading account is opened, you are allotted with a user name and a password. It is usually sent to the address provided by you at the proof of address via a registered post. With the advent of technology, today brokers are also allowed to set a password through an online link sent over email supported with One Time Password (OTP). You are required to go through several steps to start online trading on your account.
- The first step is to activate your trading account, use the password and username provided over email or registered mail to log in to your trading account. You will find a system-generated prompt message to change the password for security purposes. And add the level of authentication.
- Once it is done, you are ready to make your first purchase of equity. To do that you need to fund your account. There are several standard ways to fund your account. If your broker is offering you 3 in 1 account, you can directly transfer from the connected bank. If it is 2 in 1 trading account you can either transfer your funds via NEFT or you can use an online payment gateway to transfer funds.
- Once the fund is transferred and the account is funded, you can make a trade easily. You can easily place an order on equity online through your stock market trading account. You need to define the quantity and price.
- Once the order is placed, you can check the status of the order in your online trading account. The online trading account tracks each transaction and keeps them in one place. Once the order is executed, the executed portion of the order is reflected in the trade book.
After you start online share trading it is very essential to get comfortable with the online trading platform.
There are three following steps that you need to take
You can use online trading presentations or documentation that is provided by the broker to know the facilities offered by the broker.
Secondly, don’t jump into large trades. Get your satisfaction with smaller trades and gradually build up. Lastly, check the movement of bank debits, trade execution, and Demat credit happen seamlessly, which is highly important and is the core of the online trading account.