subject: Steps to Start Online Stock Trading [print this page] Steps to Start Online Stock Trading
Meaning of Online Stock Trading
Stock trading which is conducted through computers having internet connections is called online stock trading. You can use your home PC or an internet caf and now days even your mobile phone to place orders.
Requirements
You would need 3 separate accounts to get started for online trading. These include a demat account, a savings account and a trading account.
A demat account holds all securities in electronic form in contrast to the earlier practice of holding physical certificates. When an investor buys securities, the amount is debited from his account and when he sells securities, the amount is credited to his account. This has made the process of stock trading hassle free and reduced brokerage charges significantly.
To open an account, the investor has to approach a Depository Participant and enter into a contract with them. A savings bank account is required to start online stock trading as all cash outflows and inflows take place through this savings account.
The savings account can be attached to any of the private or public banks. You will have to arrange for transfer of funds from savings account to broker account before purchasing stock. In case you sell your stock, the amount you get will be credited to the savings account.
A trading account with any of the government or private banks, or stock brokerage firms which provide stock trading services is required. These entities charge a brokerage fee for each online trading transaction. Internet based brokerage firms offer cheap rates and also possess large amounts of information which investors can make use of.
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