After you’ve mastered the fundamentals, it’s time to open a trading account and begin trading for real money.
What is trading and demat account?
A Demat account, like a bank account, is used to store the various types of securities purchased by the investor.
The demat account is a kind of savings account where shares of various stock brokers are held.
Such accounts are opened with banks and post offices.
When buying securities, the investor sends his share certificate from the broker to the bank.
The bank then issues a cheque in favour of the investor.
Once the investor receives the cheque, he transfers the same amount to his demat account.
After receiving the transfer, the broker deducts the transaction fee from the amount transferred and credits the balance to the investor’s account.
Meanwhile, a trading account is required to buy or sell new securities.
It serves as a link between the Demat account and the investor.
A trading account is where you hold your stocks, shares, mutual funds, bonds, etc.
A trading account is similar to a bank account but is used specifically for buying and selling securities.
When you purchase a stock, bond, mutual fund, ETF, etc., you transfer cash from your trading account into the brokerage firm’s account.
When you sell a security, you withdraw cash from the brokerage firm’s account and deposit it back into your trading account.
You can place an order through your trading account, and the request to buy/sell is routed to the stock exchanges.
When the steps are completed, securities are deposited in the demat account, and the required amount is deducted from the bank account.
Steps to start trading ?
Prepare the documents
There are a few steps you must take when you are ready to open a trading account.
You must provide basic information such as your name, date of birth, and social security number.
You will also be required to provide information about your bank account.
In short, you will need KYC documents like photographs, address proofs and id proofs.
Once you have prepared all the documents, you’ll need to find a broker.
Find a broker
There are many brokers to choose from, so deciding which one to use can be difficult.
You should think about the broker’s customer service, trading conditions, fees etc.
You should also review the broker’s privacy policies to ensure that your personal information is protected.
Register with a broker
The first step when registering at a brokerage firm is to complete the application form.
This should include details such as name, address, ID proof, contact number, etc.
Once this is done, the broker will send you a letter stating that they have received your application.
The broker will then ask you to submit copies of your passport/ID card along with any supporting documents.
After this, the broker will issue you a provisional account number or will guide you through necessary steps.
Open a trading & demat account
After receiving your provisional account number from the broker, the next step is to open a trading account and demat account.
To open a trading account, you will need to deposit a minimum amount into the account.
If you haven’t already, ask your broker if you can open a demat account with them.
See if you need to register for a different trading platform, such as MetaTrader or tradingview.
Verify whether it also has a mobile platform.
After opening a demat account and trading account, now you can deposit funds required for trading.
Once you have deposited funds into your account, you will now be able to trade stocks.
Step 10 – Start trading with a small account
Now that you have a trading account, you can test the platform by trading 1 share to see if it suits your needs.
You can start trading for real after a few trades.
Before increasing your capital, practise for at least a month with the smallest profitable quantity you can find.
My trading account experience
When I first started trading, I signed up for the Zerodha platform. Then I signed up for Upstox, which offers option chain analysis.
I use metatrader 4 and metatrader 5 with an exness account for forex and cryptocurrency trading.
I used olymp trade to trade stocks in the United States. However, I no longer trade US stocks because my strategy is better suited to the Indian stock market and forex.
I opened both a demat and a trading account with Zerodha and began trading within a few days.
I also began with a small account of Rs 5000.
Because there was leverage in Indian stock markets back then, that amount was adequate for a beginner. But it was later halted. As a result, I later increased my capital.
Where to learn about trading account & to start trading small account ?
Below are the youtube videos I found useful to open a trading account and start with a small account..
To start trading in Indian stock market, open a trading account with one of the best trading platforms out there, Zerodha.
I have an account myself in Zerodha, so if you have any doubts, feel free to ask me.
To start a forex account, find a broker and watch their video official youtube channel.