Getting started with investing can be thrilling and beneficial. To start your journey, the first thing you need to do is open a demat account and a trading account. Your demat account keeps your stocks safe, and your trading account lets you buy and sell them. Different brokers and banks provide these services, and each type has its own advantages. This blog helps you with the basics, from picking a broker to making your first order, so you can feel confident in handling your investments.
Set Up Your Demat and Trading Account
To begin trading and investing in the stock market, you need a demat account to hold your shares electronically and a trading account to buy and sell stocks. Luckily, many broking firms offer both services in one place.
Full-Service Brokers vs. Discount Brokers
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Full-Service Brokers
Choosing a full-service broker allows you to benefit from expert research, advice, and many services that can improve your trading experience. These brokers assist in monitoring your investments and will reach out to you via phone when necessary. They also provide advanced products like ready-made stock bundles, investment portfolios, private stocks, and margin trading support. Full-service brokers offer wealth management services to help you with your changing income and goals.
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Discount Brokers
Discount brokers mainly provide a way to trade for lower fees. They usually do not offer any advice or research help, so you are fully responsible for choosing and examining your trades.
You can open your demat account online. You only need your PAN card, Aadhaar card, and a working bank account. With Chola Securities, a full-service broker, you can easily open your demat and trading accounts using your phone. Just download the Chola Securities app and follow the simple steps. Your account will be active and ready for trading in one or two business days.
Create Your Watchlist
Once you open your demat account, you can begin by compiling a list of companies you wish to monitor closely. A watchlist helps you keep track of the following information:
- LTP (Last Traded Price): This shows the latest price at which the stock was traded.
- Percentage Change: This shows how the LTP has changed compared to the previous day’s closing price
- Volumes: This shows how many shares have been bought and sold in a certain period. With the Chola Securities App, you can make up to five watchlists to help you organise stocks based on your investment strategies and preferences.
Making Your First Trade
When you want to buy a stock, you can choose between two main exchanges in India: NSE (National Stock Exchange) or BSE (Bombay Stock Exchange). Prices for the same stock are usually quite similar on both exchanges, so you can choose either one without significant cost differences.
Types of Trade
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Intraday Trade
In intraday trading, you buy and sell stocks on the same day. If you want to use this strategy, it's important to set a stop loss since you'll be holding your investment for a very short time. A stop loss helps you limit your losses if the market goes down.
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Regular or Long-Term Trade
In a regular trade, you can keep the stock for as long as you want. No stop loss is required in this category, so you can keep your investment longer.
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Market Order vs. Limit Order
Market Order: You purchase or sell the stock at the current market price. This order is completed almost right away, but the exact price might change a little depending on current market conditions.
A limit order means you choose the exact price at which you want to buy or sell. For example, if the stock price is currently INR 120.25 and you want to buy it for INR 118, you can set a limit order at INR 118. The order will only go through when the stock hits that price. Before making any trades, ensure your demat account has sufficient funds to avoid order rejection.
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Market Order vs. Limit Order
Market Order: You purchase or sell the stock at the current market price. This order is completed almost right away, but the exact price might change a little depending on current market conditions.
A limit order means you choose the exact price at which you want to buy or sell. For example, if the stock price is currently INR 120.25 and you want to buy it for INR 118, you can set a limit order at INR 118. The order will only go through when the stock hits that price. Before making any trades, ensure your demat account has sufficient funds to avoid order rejection.
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Use SIP to Invest in Stocks
Many trading platforms and apps now let you buy stocks using a Systematic Investment Plan (SIP). This feature is very helpful if you want to buy certain stocks gradually without having to place orders by hand all the time.
How It Works: You choose the stock, how much to buy, and how often—every day, week, or month. Once you set it up, the platform automatically makes trades at these times. If you are investing in a stock that has a value higher than the amount you have selected to invest, this option allows you to accumulate a fraction of that stock. With periodic investments, you can keep on adding more quantity of that stock.
Main Advantage: By regularly investing over time, you can even out your costs and lessen the effect of market ups and downs. Keep enough money in your account because the SIP order will only go through if you have the right amount available. Also, keep a check on the broking charges you will be incurring in case of Stock SIP.
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Keep an Eye on Your Trades and Investments
After you make trades, you can check their status in the order book, which records all orders sent to the exchange. Your trade book keeps track of finished trades and partial orders, so you can check your activity and performance.
Full-service Broking platforms like Chola Securities offer extra tools and insights to make your experience easier. These may include tips on performance, tools for managing your investments, and alerts that help you make quick decisions.
To start investing in the stock market, you need to open a demat and trading account and learn about the different options you have. If you want advice and help, a full-service broker can improve your experience with tailored services, reliable recommendations based on research, and a wide range of products.
After opening your accounts, you can make watchlists, place market or limit orders, and use SIPs to build long-term investments. Keeping your orders and trade books organised helps you monitor all your transactions as they happen. No matter what option you pick, make sure to use stop losses wisely, keep enough money in your account, and continue learning about market trends.