Check these things before You Open a Trading Account

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Open a trading account

Opening a trading account is quite easy although there are some things that you must keep in mind at all times. It is vital to open your Demat account if you wish to trade in the stock market. This is because you cannot sell or purchase securities without possessing your Demat account.

A functional Demat account is highly necessary for being able to trade or invest in derivatives, equities, exchange-traded funds or ETFs, debentures, and other bonds accordingly. You will not require any Demat account for mutual fund investments although you can still keep your mutual fund units closely held in the same. You will have to take the services of a reliable broker or mutual fund house/firm which already has SEBI (Securities and Exchange Board of India) registration. The procedure is quick and without any hassles.

You will only have to provide a few documents via the e-KYC procedure if you wish to open a trading account. You will also have to adhere to the minimum prescribed guidelines for eligibility although a few things must be kept in mind at all times prior to opening this account.

Aspects to be aware of while opening your trading account

From market performance to trends over a historical duration, there are several aspects that you should keep in mind while foraying into stock market investments. Here are some aspects worth considering before you open your trading account.

  • Brokerage Type – Whenever you start your search for the best broker or mutual fund firm, make sure to brush up on some crucial details. There is either full service or discount brokers available in the market. The latter will only be executing instructions while helping provide derivative and equity trading solutions in the bargain. A full-service broker will offer easy trading and investment-related opportunities spanning equities, mutual funds, futures, options, commodities, IPOs, currency, and much more. They will also offer advisory and portfolio management solutions along with extensive technical and fundamental research reports alike.
  • Brokerage Charges – Fees for opening Demat accounts or brokerage charges may vary from one firm to another. While many offer free Demat accounts these days, they may also charge hefty transaction fees upon purchases or sale of equities in the market. Along with fees for opening your account, you should also check the fees for annual maintenance along with specific transactional charges on your Demat These charges should be tackled carefully since they may vary from one brokerage to another.
  • Procedural Aspects – Opening Demat accounts should not be a procedure that is difficult and long-winding. SEBI has extensive guidelines on Demat account opening although the brokerage should simplify the whole procedure while shortening the opening process considerably. Brokerages have shifted Demat account opening towards fully digital platforms and the whole verification, e-KYC, and documentation are expected to be completed online itself. The self-identification process, based upon SEBI guidelines, should be completed via real-time online videos. Ask the brokerage about how soon you can commence your trading journey post-opening your Demat
  • Operational Aspects – Trading in derivatives and equities should be a hassle-free affair since a delay of even a few seconds may be the difference between making a profit and posting a loss. It is ideal if the brokerage can provide a Demat and trading account facility alike so that you can avoid any transactional delays. Ensure that the firm has a website or mobile app which is properly functional and helps you stay on top of things while on the move. This will help you trade, invest, track, and monitor almost anywhere without any hassles whatsoever.
  • Trading Platform – Possessing a suitable platform for trading is vital, particularly if you are desirous of venturing into intraday trading. You should choose a brokerage with a suitable trading platform. These days, mobile app, web-based, and desktop trading platforms are fast becoming more popular with their sheer efficiency, simplicity, and swiftness. Undertake research on these trading platforms used by brokerages which should be completely reliable, free from bugs, and stable at the same time.
  • Nomination Aspects – If the investor suddenly passes away, then investments under his/her name will naturally have to be transferred to a nominee who is identified at the time of account opening. Carefully consider this aspect while keeping financial goals and objectives in mind for the family in the future. The person who is nominated should be aware of this fact and completely in tune with these financial goals. He/she should also carry these investments ahead for meeting the goals in question.
  • Online software/access – Check out whether the trading software offered by the brokerage/firm is user-friendly and simplified. Software applications that are hugely complicated will only make life difficult for you throughout your trading journey.
  • Support & Service – In spite of technological advancements, there may be issues cropping up now and then for transactions. You will require quick support in such cases from the back-end support team. They will help in resolving all issues quickly. Check back-end support of your online trading firm/brokerage before coming to a final decision.

Conclusion

These are some of the aspects that you should carefully analyze before opening your trading account. Try and read up on the market, basics such as stock market timings to investment strategies, and assess your own financial position carefully before taking the plunge. Be prepared to take risks, depending upon your financial capabilities and also try and stay invested for the long haul without looking for short-term gains or windfall returns. A little patience, discipline, and perseverance will serve you well throughout your investment journey.

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