Welcome to the Trading Basics section.
This section is designed to introduce beginners to the fascinating world of trading.
Trading can be a very exciting and worthwhile endeavour and the main attraction for many people (not including 'making money' which is obvious) is the fact that you can do it from almost anywhere.
Some advantages of trading include:
•Self employed – you are your own boss
•Geographical freedom – technological advances are making this easier every day
•Minimal capital outlay – compare this with purchasing a franchise
•Unlimited potential for profit – financial freedom is what most traders aim for
•Flexibility with time – you choose when you trade and when you don’t
•Almost anyone can do it – if you are old enough (usually 18 or 21), you can open a trading account and begin
OK, let's face it - the main reason why people trade is to make money. How do we do that however? In simple terms, we buy a financial product and then sell it later for a higher price.The product may be stock in a company, a futures contract or even a foreign currency.
How to start trading
1) Open a broking account with a registered stock broker. You can also open an internet trading account and start trading by click of a mouse.
2) Submit your details and sign the broker client agreement with your broker. This is mandatory.
3) Open a Demat account with any of the Depository particiapants registered with NSDL or CDSL. If your broker is also a DP, you can open the DP account with him also. Sign the relevant papers and execute agreement.
4) Don't deal with unregistered intermediaries, as this would expose you to counter party risk and may lead to losses without any stock exchange recourse for remedy.
5) Give clear and unambiguous instructions to your Broker / Sub-broker.
6)Keep a record of all instructions issued to the Broker / Sub-broker.
7) Insist on a contract note issued for each day of trading and confirm the details printed therein about your transactions for the day.
8) Don't fall prey to promises of unrealistic high returns. It is easy to lose money that way.
9) Don't indulge in speculative trading, go by fundamentals of accompany and invest for medium to long term.
10) Trade within your predetermined limits and financial capacity.
11) Promptly issue delivery instructions to your DP for transferring the shares sold by you to your broker's account. Failure to do so may result in huge losses for you.
12) Use the Investors' Grievance Redressal system of the stock exchanges and Depository to redress your grievances if any.
