The stock market consists of buyers and sellers who trade in shares and derivatives (Options and Futures) over the stock exchanges like BSE and NSE. Shares are basically fractional ownership in a company. The stock market is regulated by the capital market regulator, SEBI or Securities and Exchange Board of India. SEBI looks after the functioning of the stock market and ensures fair trade practices. Price manipulations and Insider trading brings strict action from SEBI.
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Stocks can multiply money and give higher returns due to the compounding benefit. There are few important things that a person should keep in mind before investing in shares. You must follow some procedures to get started with the trading. Open a demat and trading account. Link both the demat and trading accounts with your savings bank account called 3-in-1 account to facilitate smooth transactions. The process is very easy and is completely online.
Get a Broker: The broker helps buy and sell shares. If you want to trade in shares, better find a broker. The trade is carried out through the broker as he facilitates trading between both the parties. To trade in stocks it is important to open a DEMAT account with a SEBI registered broker.
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Get a Demat Trading Account: a DEMAT account enables the storage of shares, electronically. For trading in shares you must open a trading account along with DEMAT account. After buying the shares, they get automatically transferred to your DEMAT account.
To open a DEMAT account; you must first select a depository participant like a bank. Fill up the account opening form and attach the documents required which are – proof of identity, proof of address, PAN card and passport sized photographs.
Read in detail the copy of the rules and regulations and terms of agreement. You will then be informed on the charges that would be incurred. Verification will be carried out during the process where an executive from the depository participant contacts you and checks the details provided in the account opening form. Once the application is processed, the DP will provide you with an account number or client ID. You can use the details to access your DEMAT account online.
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