A Step-By-Step Guide On How To Start Online Trading In India

A Step-By-Step Guide On How To Start Online Trading In India

Trading in the stock market used to be challenging and risky even a few decades back. Only a handful of people, who understood the marketing dynamics and were ready to take risks to grow their wealth, would engage in stock market investing. Nowadays, it is simple to invest in online trading. You only need a laptop or desktop, an internet connection, a mobile phone with a valid sim card, and an appetite for risks.

What is Online Trading?

Transactions of financial products online are called online trading. There are various platforms for doing online trading of all the financial instruments such as stocks, commodities, bonds, ETFs, futures, etc.

How to Start Trading in the Share Market?

To start online trading, you must open a Demat Account and a Trading Account with any reliable financial institution. Thereafter, you need to credit the Demat account with funds to allow transactions. A Trading account allows you to buy and sell shares, check prices, and statistics.

Read the article given below to understand the basics of online trading in the share market:

  • Gain good knowledge of the market

Before investing in the share market, it is essential to have proper financial knowledge of the market. If you are aware of the market scenario and the basics, it becomes easy to analyze any stock and compare its trend with other stocks.

  • Look for a reliable broker

A good broker is an absolute necessity as they help you open your Demat and Trading accounts. A Trading Account enables the buying and selling of shares, while a Demat account helps store the bought shares in electronic form. Always look for the Demat and Trading account opening charges and the annual maintenance charges of the brokerage site. Also, the brokerage fee is a commission-based fee in the form of percentage-based brokerage or a flat fee per trade.

  • Follow stocks of your interest

Before buying any stock, it is advisable to follow the market trend for at least a month. Watch carefully, how the market is growing, and how the stock is behaving amid market fluctuations. Being aware of the impact of the market on different stocks would help you save a great deal of money and time.

  • Open Demat and Trading Accounts

For opening a Demat account, you need to fill up a form and submit it to your broker. Brokers charge an annual maintenance fee and brokerage fee for opening the accounts.

  • Credit your Demat Account

As soon as you fill in the form, you will get a login ID and password for logging into your Demat account. Thereafter, credit your Demat account with some money as per your requirement from any pre-existing bank account to carry on the transactions.

  • There you go!

Once you complete all the formalities, you can start Online trading. My advice to you would be to make sure that you invest in different schemes and do not indulge in only one stock. This helps you prevent future financial crises. Also, be aware of the pitfalls of the market. It would help if you are vigilant in choosing the shares and their current trend.

Documents Required for Opening a Demat And Trading Account

Here is a list of the documents needed to open a 3-in-1 account:

  • Identity Proof - Driving Licence, PAN card, Voter Card
  • Address Proof - Passport, Aadhar Card, Ration Card, Bank Account Statements not older than 3 months, etc.
  • Proof of Income -  ITR receipts can be used as income proof.
  • Bank account proof - a canceled cheque.
  • Three passport-sized photographs.

Advantages of Online Trading 

  • Online trading has numerous benefits, one among them is the return rate. Trading can generate better return rates than any bank account’s interest rates.
  • Trading provides wealth accumulation as you have assets in the form of shares, which have a certain value at any forthcoming stage.
  • The shareholder is entitled to have ownership in the company even if the amount invested is small. The ownership offers benefits, such as dividends, bonuses, voting rights, etc.
  • There are various long- and short-term tax benefits for investors. Also, any loss of capital is carried forward from eight financial years.

Disadvantages of Online Trading

  • The share market is highly volatile and thus, investing here can be risky due to the market fluctuations. E.g. Navi Mutual Funds have been following an upward trend, but it has been seeing a volatile trend this year. Thus, it is considered a high-risk fund.
  • In case a company is winding up, the shareholders are paid in the end, and the creditors and bondholders are given the first preference.
  • The market fluctuations compel the customers to buy and sell at prices different from their expectations. All this can be an emotional roller-coaster ride.


Besides the numerous benefits the share market offers, investment in the market needs a meticulously-planned approach. Before you start online trading, always understand the market and the basics of investing in share markets. After all, the journey can be long but the destination has to be profitable and comfortable.

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