Online Trading | Image Resource: appreciatewealth.com
Companies are listed on the stock exchange and share trading is the process of buying/selling the shares of these companies. These activities are performed to make a profit. When you purchase a share of a company you get to own a stake in that company.
For example, if a company issues 1000 shares and an investor buys 100 shares of the company then the investor gets a 10% stake in that company. The investor gets the right to vote on the company’s decisions and a say in the company’s governance.
The main benefit for the retail investor lies in getting a price appreciation for the stocks. They make a profit by selling shares at a higher price than the price they are bought.
Now most brokerages offer apps to help you trade online in the share market. For online trading, you need to open an online trading account and a Demat account. You can buy or sell shares, bonds, mutual funds and other securities. This can be done without consulting an intermediate stock broker.
The trading account and the Demat account should be opened with a stock broker registered with SEBI (Securities and Exchange Board of India). The Demat account is used to hold the shares in the digital format. The trading account is used to transact in the stock exchange. To open the account you need a bank account, PAN card, proof of address and identity proof.
After opening the account you will get login details and password. You can now create a watchlist and buy shares online. Appreciate offers an app to trade online in the share market.
India’s two main stock exchanges are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The timings of the market are from 9.15 am to 3.30 pm, Monday to Friday.
Price of shares
The price of the shares is determined by the demand and the supply. If it is expected that a company will do better then the investors will flock to buy the company’s shares. The investors will sell the shares if a company has a negative sentiment and the prices of shares will come down.
Traders vs. Investors
Trading involves the short-time buying and selling of shares. For example, Day traders square off the positions on the same day.
Investing involves the buying and holding of shares over a long period of time like days or months or years and then selling them.