Steps to use Demat Account To Trade in Commodities


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People have always been skeptical about investing in share and equities. Most people would prefer buying gold, silver, and land as their value would always be appreciated in the future. One would also need to know how to purchase shares through Demat. Today shares can be bought and sold at a nice margin of profit. It is not that difficult to find a broker who would help you in the initial days. Once you have gained enough expertise, you can have your own go at the stock market. However, before dealing with your Demat account online and buying shares, there are a few steps that you need to follow.

  1. Get a PAN Card

One of the first steps that you need to do is to get a PAN card. PAN stands for Permanent Account Number. Getting a PAN card is a primary necessity, and it would be needed to make any financial transaction in the country. The PAN number is nothing but a ten-digit alphanumeric code. It is a valid proof that is offered by the Government of India. The tax authorities in the country would be looking at the PAN card to assess the tax liabilities of a person.

  1. Create an operative Demat Account with a bank

A valid Demat account needs to be opened next as this would be the one thing facilitating a smooth transition of buying and selling shares. You would need to fill in some forms, which can be done both online or offline. Post this, and you would need to attest to the required set of documents and get them scanned to the brokerage company you desire transacting with. Your Demat account would be opened after the reports have been verified in a precise manner. You would now be free to buy and sell shares using the account. You can invest in shares and derivatives. The Demat account would be the storehouse of the stock portfolio that you create.

  1. Get in touch with a broker

You would either be transacting directly with stocks or doing it through a broker’s office. In either case, you would have a broker who would be giving you proper guidance on the aspects of trading in shares. You would get to learn from him if you regularly buy stocks. The SEBI (Securities Exchange Board of India) board certifies these individuals and grants them the license to act as brokers.

The broker would act as an intermediary between the stockbroking firm and an independent share trader. He would be charging a small sum to help the traders as commission and ease up the buying and selling process. It is not mandatory that a broker has to be an individual. It can even be a company or an online agency. They are also registered or licensed under the SEBI or the Exchange Board of India. Thus anyone who is licensed under the board to regulate the share markets and help the traders invest in shares can be termed as brokers.

  1. Depository Participant

The next thing to know about is the Depository participants. There are two types of Depository Participants in India. One of them is the Central Securities Depository Limited (or CSDL), while the other is the National Securities Depository Limited (or NSDL). These institutions have Depository Participants. These Depository Participants or DPs help you store the shares. They would provide a unique account number concerning the same.

It is easy to get confused with the Trading and Demat accounts. While the trading account would reflect the purchases and sales that have taken place in your account, you would be able to store the shares you buy on the Demat account online. The Depository Participant is responsible for holding the stocks that you have purchased and released the shares that you have sold. The broker would be taking care of all these actually, but you need to know what role the Depository Participant has to play in all of this

  1. Professional investors use UIN

UIN is also known as Unique Identification Number. The UIN is mandatory for those whose transactions involve at least 100,000 in the capital. For usual or low vital investors the UIN is not required. The investors usually try to play with the more significant innings to buy the high-end blue chip stocks or to buy the shares of the high profile companies. The more substantial innings stocks can offer you better assurance on the returns over the mediocre stocks. Some of the blue-chip shares that you can get involved with are Nestle, Apple Inc., Hindustan Lever, L&T, India Cements. You should try investing your money with them.

  1. Starting to buy and sell shares

Now that you are comfortable with the entire process, you can start investing in stocks. You can buy them and sell them at will. However, you should be looking at your profit margins.

For instance, you would like to buy shares of a company X at Rs. 500. You would then contact the broker and inform him accordingly. You can even dial a toll-free number for the broker if you do not have access to the Internet and inform him about the same. Suppose you buy 20 shares at this price, and now you decide to sell a few of them after a particular time. You would ask the broker to sell ten shares of the company X at Rs. 550. The sale order would get processed as soon as the shares reach the price. You could even execute a stop order transaction. This would enable you to freeze a particular transaction on account of market fluctuations.

Learning how to deal with shares takes quite some time and experience. Not only that, you would need to keep yourself updated about the latest news about the companies whose stocks you are investing in. This would enable you to stay ahead of the curve and make sure that you get a good profit margin very soon. Lots of people have gathered sufficient wealth dealing in the equity market. Then why should you abstain from it?

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