After gold and silver, the most sought-after investment option for Indian investors is the stock market. The market changes every day and you can make the most of it with the right investment decisions. If you do not have the time or knowledge to carry out market research, you can gain strong information from people who have regularly invested in the market. Investing in the stock market has become very easy and convenient. You do not need to contact a broker for the same. You can also carry out market research online with ease and make the correct investment calls. If you want to invest in shares in India, you need to learn to trade online. Online share trading will help you to make investments with a single click.
Tips to Invest in Shares Online
Here are some tips that will help you succeed in online trading.
1. Keep your PAN card handy
Permanent Account Number (PAN) card is a basic requirement in order to make financial transactions in India. The ten-digit number is assigned to an individual by the Income Tax (I.T.) department. A PAN card is required to open a bank account, to invest in mutual funds, and to file I.T. returns. In order to carry out online share trading, you need to have a PAN card.
2. Speak to a broker
There are two ways, through which you can begin trading on equity. The first approach is to contact a broker who is authorized to buy and sell shares on your behalf and he will help you with the same. The second option is to open an online trading account with a reliable company and make transactions on your own.
3. Get a trading and demat account
After you have a broker or have decided to trade independently, you need to open a demat account and a trading account. The demat account will keep the shares in your name and it will reflect on your portfolio. The shares will be in a dematerialized form, which makes them easy to maintain. You can also sell the shares from the demat account. In order to buy and sell the shares, you need a trading account, which will facilitate the transactions of buying and selling. Both the accounts are important and should be opened simultaneously.
4. Know about the Depository Participants (DPs)
There are two DPs named National Securities Depository Limited and Central Depository Services Limited. Their agents are known as Depository Participants who store the shares, which are held by you. The DP will hold the shares you purchase whereas the demat account will show the number of shares you hold.
5. Unique Identification Number
If you make a transaction of more than INR 1 lakh at a time, you need a UIN. It is not required for if you are a small investor.
6. Buying and selling
Once the process of demat account opening is complete, you need to inform the broker about the shares you want to buy or sell. In case of an online demat account, you can make the purchases yourself or contact the customer care if you need assistance. The buying and selling of shares will take place through BSE and NSE, which are the only two brokerages in India.
Types of Investing
Before you begin to make an investment in the share market, you need to understand the different types of share market trading you can engage in.
In trading, you focus on the amount of profit made over a short period without considering the rise and fall in the market. When the market is rising, you buy at a lower rate and then sell at a higher rate over a short duration. The profit is generated by buying at a lower price and selling at a higher price. It is also known as shorting. The holding period of the stock is only a few hours or a day because there is constant entering and exiting. Unless you have a clear investment strategy and an understanding of the market, trading can become dangerous. If you are not quick enough, you could end up with huge losses.
2. Value Investing
Value investing is the opposite of equity trading where you hold the stock for a long period and generate profits on the change in the value of the stock over the duration. The advantage of holding a stock for a longer tenure is gaining dividends, bonus, stock splits, and making the most of the rise in the price of the stock, as the business reaps profit over the years. There are stocks known as multi-baggers, which generate high returns for the investors. Another advantage of this method of investment is that the fluctuations in the price, which are caused by external events. There are many fluctuations in stock prices, which occur because of business trends or changes in the economy, and in the long term, they can be nullified. If you invest in good stocks and hold them for a long tenure, you can generate wealth.
Choose the method of investment based on your long-term financial goals, and make the right buy and sell decisions after considering the market movement and the price of the share. If you are an investor who is open to different options, you can consider alternatives like currency trading and commodity trading in India based on your investment criteria and long-term goals. In addition, you need to understand that there is a difference between equity and derivative trading, which you need to understand before you begin to trade. Derivatives include options, swaps, as well as future contracts. Therefore, you must aware about various investment options before investing in stocks/shares.