Beginner Guide to Start Online Trading in Share Market
Once your trading account and the demat account are activated, you are allotted
a unique trading account number which is linked to your demat account. Once that
is done there are 4 key steps that you need to go through to be fully prepared for
online trading in share markets.
Let us also learn how to place your online share trades and how to do online trading.
Online trading India is as much about understanding the rules and discipline
as it is about research and technology.
Step 1: Activate Your Online Trading Account
Once your trading account is opened, the next step is to log into your trading account
and activate your user name and password. The online trading platform will prompt
you to change your password. Set a password that you can remember but do not set
obvious passwords like your name,
date of birth or marriage anniversary. Change your password frequently (once in
15 days) and never write down your password anywhere. In case you forget your password,
there is a simple method to retrieve the password online with proper authentication.
Step 2: Ensure that Your System Security Settings are Checked Properly:
This may sound quite simple but it is essential to ensure that your computer does
not get infected by a virus or is not attacked by hackers using malware. These attacks
will not only compromise your hardware but also your trade data and your linked
bank accounts and demat accounts.
Ensure that your anti-virus and anti-malware are updated. Avoid downloading videos
and other programs from unknown sources on the PC in which you intend to do online
trading. Above all, never do online trading from a cyber café or using unsecured
Wi-Fi connections at malls, airports etc.
Step 3: Start with Small Amount to understand the Process:
Your initial share trades in your online trading account should be of small sizes
so that you get comfortable with the process flow. Ensure that when you transfer
funds from your bank into the trading account, they get reflected in your online
trading account balance. When you buy shares, also ensure that the shares are automatically
credited to your demat account on T+2 day.
When you place a cash market trade or an F&O trade, check the order book to confirm
that the orders are placed at your desired price level. You can also check the trade
book subsequently to get confirmations on the execution of orders. Finally, make
it a point to check the contract notes on a daily basis and keep a tab on the costs
that you are incurring while trading.
Step 4: Learn the Practical Rules of Online Trading:
The next step is to execute the actual online trade within the gamut of certain
basic rules to protect your trading account risk. Remember, managing risk is the
first thing that you need to focus on before learning how to make profits. When
you are placing an order, be clear on when you must place a market order and when
to place a limit order.
Use market or limit orders based on market volatility so that you get the best price
while buying and selling. Secondly, you must understand the importance of stop losses
while trading. Stop loss is a protection mechanism which helps you to limit your
losses while trading.
Stop losses are placed below your intended buying price and above the intended selling
price. If you are trading futures then you also need to worry about mark-to-market
margins that you will have to pay if the price moves against you.
When it comes to share trading, and especially online trading, you are the master
of the trading terminal. As much as it gives you the power in your hands, it also
calls for a higher degree of accountability on your part. The ground rule in online
trading is; for you to focus on managing risks. The returns will eventually take
care of themselves.