A Brief on Trade Using Demat Account

Nowadays, more Indians seem to be interested in stock markets. Investors are no longer burdened with the physical, paper stock certificates to trade in the stock market. All they require to trade in the stock market is a Demat account and a trading account. Thanks to technology, investors can now access almost everything at any instant directly by themselves. 

The online trading platforms made it more affordable, and anyone of any age group can now trade seamlessly. Moreover, online trading reduces the paperwork and charges and transaction time. This article discusses the Demat account and how to trade in a Demat account. 

What is a Demat Account?

Before understanding how to trade with a Demat account, let’s understand a Demat account in detail. A Demat account is a dematerialized account and holds all your securities, stocks, shares, bonds, debentures, and funds electronically. Everyone knows that trading in the stock market was carried out with the help of physical paper stock certificates in the past. It was time-consuming, and investors were always worried about their stocks. With the arrival of the internet, everything has turned digital. People can store their stocks in digital or dematerialized form by opening a Demat account. 

A Demat is just a storehouse to hold all the stocks you buy and sell in the market. Demat accounts resemble bank accounts in a way. For example, just like storing your money in a bank account, you can store your securities electronically in a Demat account. For every transaction you make, the account is either credited or debited. Demat accounts are safe and help you get rid of your stress regarding the security of your Demat account. The trading process in the Demat account has no risk of theft and is convenient to use. You can even keep the login credentials with yourself and log in to your Demat account ID on some other device. Then also, you will be able to access your documents.

Why Do I Need a Demat Account

To understand how to trade using a Demat account, you need to know why you need a Demat account. First, it is not safe to trade in the stock market without a Demat account. While the Demat account is used as a warehouse, a trading account is used to place orders in the stock market. 

Open a Demat account from any of the reliable brokers in India. Then you must link your trading account with your Demat account. Some brokers offer the simultaneous opening of both accounts or both accounts already linked. It is always better to open a linked account from a stockbroker rather than opening single accounts from different companies for a hassle-free trading experience. 

How to Trade Using a Demat Account?

Here are the steps to trade in a Demat account.

• To start trading in the Demat account, you have to place an order through your trading account linked with your Demat account. 
• The order for trading will then be processed at the exchange, either the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE). 
• The exchange will check all the details about your Demat account’s order and other information, including transactions.
• After the order is processed, you can conduct your transactions; shares will be credited to or debited from your Demat account. 

Benefits of Trading With a Demat Account

Along with understanding how to trade with a Demat account, you must also know its benefits. Demat accounts hold many features and benefits, including ease of accessibility, transfers, cost-effectiveness, and speed facility. Also, you can easily avail of a loan by using your shares as collateral. The benefits of trading with a Demat account are as follows: 

• It is easier to access due to its availability online.
• Opportunity to open a Demat account for free.

The above are only a few examples. There are also many other benefits associated with trading with a Demat account.

Charges Associated With Opening a Demat Account

You can’t take anything for granted, right? There are some charges associated with Demat like opening account charges, safety (or custodian) charges, Annual Maintenance Charges (AMC), transaction charges, and Demat & Remat charges. The opening account charges may vary with brokers. Some brokers offer free Demat account opening. Generally, the account opening fee can range from nil to 250. There is a charge for maintaining your Demat account called an annual maintenance fee that ranges from Rs 300 to 900 per annum, commission, and a transaction fee of roughly Rs 1.5 for each share for every transaction in your Demat account is carried out by the broker. 

Conclusion

Demat and trading accounts are indispensable for trading stocks since a Demat account is an essential component for online trading. 

It has replaced the expensive physical norm of trading prevalent in the past. Demat accounts reduced the cost of trading, making it affordable for the common person. You can open a Demat account from any reliable brokers available in the Indian stock market. After opening a Demat account, link it with a trading account to conveniently trade in a Demat account. Some people may think trading or handling a Demat account is complicated, but the truth is, it is a simple process. 

Although you can’t trade in stocks or bonds without a Demat account, commodities, currencies, derivatives, etc., can get traded without a Demat account.

Make sure to choose a good broker who understands your financial goals and your current trading budget and helps you accordingly because having a good broker by your side can make the process of trading with a Demat account. 

You can also open a Demat account online through the official app or the website of your DP. Make sure to submit all the necessary documents, and once you submit all your documents, you will be able to open a Demat account without any difficulties. This article is helpful for you if you are wondering how to trade in a Demat account.

Frequently Asked Questions (FAQs)