The Demat account number is cited for all forms of transactions to ensure online settlements of stock trading.
Access to an account is limited to one person at a time. A Demat account requires an internet secret password and a transaction password in alphanumeric format. All forms of transaction are allowed only after validation of both the passwords successfully.
There are majorly 6 types of Demat accounts in India:
- Equity Demat Account
- Equity and Derivatives Trading Account
- Commodity Demat Account
- Commodity Trading Account
- Discount Broking Account
- Full-service Trading Account
What is Demat Account
Demat account introduction and definition: A Demat account (short for Dematerialized account) is an account to hold investment, instruments and financial securities in an electronic format. Instruments include equity or debt in the form of bonds or mortgages.
Demat accounts are regulated by two government appointed depository organisations, National Securities Depository Limited and Central Depository Services Limited. While SEBI, The Securities and Exchange Board of India, is the authority established and the principal regulator for Stock Exchanges in India. SEBI’s core functions include identifying companies, securing investments, protecting investor interests, promoting and regulating the Indian securities markets.
India adopted electronic depository system after introduction of the Depository Act of 1996. The cumbersome process of identifying stocks, trading, sales, purchases and transfers of shares became significantly easier and most of the corrupt practices and risks associated with paper certificates were immediately mitigated.
Who is a Successful Demat Account Trader?
It is no brainer to know that it helps to have knowledge on few aspects of stock market and that you need basic ability to acquaint with online trading practices. And above all, spare money to invest in trading online using Demat account.
There are many questions troubling a new trader planning to invest using Demat accont.
Some common FAQs are:
- How do you become expert at it?
- If not an expert, then at least how to become good enough to transact trading online?
- Is it really easy to manage and survive speculative stock trading options?
The answer to all FAQs is very simple. You must have extra money and ample time to research about performing companies to be able to develop a robust trading plan that shows you path to make trades in the stock markets. The time consumed in understanding about background of companies is very important. Support from the staff of Demat account company is also available for individual traders. It is quite easy to make adequate money and slowly capitalise towards trading bigger stocks.
Simply put: If you don’t have extra money to absorb risks, you won’t last. And if you don’t have a good trading plan with ample support from stock broking company staff, your investment would not give you better returns.
Without keen interest in learning the nuances of stock market, it is not advisable to invest large amount of money in the stock market. Your success in tuning higher ROI solely depends on how you prepare yourself intellectually, academically, cognitively, financially, technologically and personally through the development of an easy-to-refer-implement trading plan.
What You Need to Trade Using Demat Account?
Even if you have large sum of money to invest but if you do not have these qualities then do not consider opening Demat account. You need dedication, research, knowledge, patience, and market sense to be able to trade stocks, funds, futures and options using Demat account. If you really want to earn money using your Demat account then you should develop these traits to become a successful trader.
You can download stock trading app here.