The stock market of any economy is considered one of the major drivers of its growth. Not only does a robust stock market indicate the existing financial strength of an economy, but it also signifies its potential for economic development. Counted amongst the fastest growing global economies, India has a dynamic and strong stock market and associated ecosystem.
You can participate in the country’s stock market by opening a trading and demat account and selecting stocks to invest in. In this article, we shall discuss how to start stock market trading in India in four simple steps; read on to find out.
Four Major Steps To Start Online Stock Trading In India
Since the introduction of electronic trading in India, the answer to the question ‘how to trade’ has become somewhat simpler.
The process of online stock trading is extremely structured and highly monitored. You can purchase and sell securities online and have them stored safely in a digital account termed as a demat account.
Not only is the mechanism of online stock trading time-efficient and cost-effective, but it also enables investors to have a high degree of liquidity and visibility vis-a-vis their portfolio. Should you wish to start stock market trading in India, here are four simple and actionable steps you can complete.
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Open A Trading And Demat Account
The first step to start online stock trading in India is to open trading account and a demat account. While a trading account is necessary to place online purchase and sale orders in stock exchanges, a demat account is essential for the safekeeping of your digital share certificates.
You can open a trading and demat account online by selecting a depository participant (DP) of your choosing, and completing the account opening process on their official website. Alternatively, you can visit the official website of the Bombay Stock Exchange or the National Stock Exchange to select a DP and open a trading and demat account.
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Ascertain Your Investment Goals, Timeline, And Risk Appetite
Once you have a functional trading account and demat account, you can start building your investment portfolio. Before that, however, you must gain clarity on your financial plan, your investment goals, and timeline of investment. You must ask yourself questions such as
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How much do I wish to invest?
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What types of stocks should I invest in?
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How long do I want to keep my money invested in the stock market?
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How much risk am I willing to undertake?
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Choose The Stocks You Wish To Invest In
After attaining clarity on your investment plan, you can start selecting stocks to purchase. There are several ways to select stocks for your investment portfolio. You can either start with the stocks of industries and companies you consider good investing avenues, and check their fundamentals over the past few years.
Alternatively, you can use technical analysis to study market trends and decide which stocks to invest in. It is also possible to combine the aforementioned two approaches to investment.
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Add Funds To Your Trading Account And Start Trading In Stocks
The next step in the how to trade in stocks online process is to add the required funds to your trading account.
In order to do so, you must firstly calculate the total amount required for the purchase of the selected stock, considering factors such as the market price of each share, number of shares you wish to purchase, transaction charges, etc. You can link your bank account to your trading account and easily add funds to the latter.
Then you can place orders for the selected stocks through your online trading account (on the DP’s official website or mobile application). Once the exchange matches your buy order with a corresponding sell order, the transaction shall be executed.
After the expiration of the applicable settlement cycle (T + 1 day for stocks), your shares shall be credited to your demat account. In order to sell your shares, you must firstly transfer them from your demat account to your trading account and then place a sell order.
To Sum It Up
Now that we have discussed how to start stock market trading in India in four simple steps, you can select a DP and open a trading and demat account, choose stocks to invest in, and start your trading journey.
