Trading account Archives

Two years back, I wrote an article on the difference between a demat and trading account. That article got a lot of attention from the readers, asking me to further elaborate on where to open these accounts.

As I didn’t cover which stockbrokers are suitable for which users in that article, I received a lot of queries from the readers regarding where to open demat and trading account. Most of them were beginners and therefore, I decided to write an article on the same which can be helpful for the newbie investors.

In this post, I’ll discuss the stockbrokers which I’ve personally used and researched. In my investing journey of the last five years, I’ve come across many trading platforms. From full-service brokers like ICICI direct, HDFC securities, SBI Smart, etc, to the newer discount brokers like Zerodha, Upstox, 5Paisa, Trade Smart Online, etc, I’ve reviewed them all. Moreover, being in the trading field, I need to remain updated with the latest brokers and their charges.

By the end of this article, you’ll have a good knowledge of where should you open your trading and demat account. I’ll try to keep things as simple as possible while answering. In addition, I’ll also disclose which stockbroker I use for trading in stocks. Therefore, make sure that you read this article till the end. I’m confident that it will be helpful to you.

Where to open your Demat & Trading account?

1) Difference between demat and trading account?

Before we dive into the topic, let me give you the smallest explanation of what’s the difference between demat and trading accounts so that we are all on the same page.

Just as money is kept in your savings account, similarly your bought stocks are kept in your demat account. When you buy a stock, it gets credited in your demat account. And when you sell it, it gets debited from the same. At any time, your demat account reflects all your holding stocks. By the way, a demat account is a short form for ‘Dematerialised account’.

On the other hand, a trading account is a medium to buy and sell shares in a stock market. It is used to place purchase or selling order for a stock in the market.

For example, let’s say you want to buy some shares. Then, you need to enter details like ‘Which share you want to buy?’, ‘How many quantities of shares you want to buy?’, ‘At what price you want to buy that shares’, etc. And all these placings of buy/sell order is done using a trading account.

While trading in Indian stocks, you’ll need to have both demat and trading account. Anyways, both these accounts are linked and can be opened with any stockbroker. Further, in the era of the internet, opening these accounts is really simple and fast.

2) Do you need a stockbroker to trade in stocks?

This is one of the frequently asked questions that I receive over email. Therefore, I needed to answer this one here.

Yes, you need a stockbroker to trade in Indian stocks.

You just cannot walk in the stock exchange to buy/sell your stocks. There are a lot of processes involved in the transfer and settlement of stocks for a satisfactory buying and selling experience of the participants. And here, stockbrokers plays an important role, along with the stock exchanges and regulators. Overall, you’ll need a stockbroker to trade in stocks.

3) What is a stockbroker?

Basically, a stockbroker is an individual/organization who is a registered member of the stock exchange and are given license to participate in the securities market in place of its clients.

From big banking corporations like HDFC Securities, ICICI Direct, Kotak securities, etc to newer fastly growing startups like Zerodha, Fyers, etc all are examples of stockbrokers in India.

Stockbrokers can directly buy & sell stocks in the share market on behalf of their clients and charge a small commission for this service. However, the commission is minimal compared to the fast trading platform that they offer. Using these platforms, you can buy/sell stocks within minutes using your web/phone while sitting on your home sofa.

4) What are the types of stockbrokers in India?

There are two basic types of stockbrokers in India: Full-service brokers (Traditional Broker) & Discount brokers (Budget brokers).

— Full-service brokers

These are traditional brokers who provide trading, research, and advisory facility for stocks, commodities, and currency. These brokers charge commissions as a percentage of each trade executed by their clients. They also facilitate investing in Forex, Mutual Funds, IPOs, FDs, Bonds, and Insurance.

A few examples of top full-service brokers in India are:

— Discount brokers

These brokers just provide the trading facility to their clients for stocks, commodities and currency derivatives. They do not offer advisory services. However, these stockbrokers can save you a lot of brokerages while trading in stocks. Here, you need to pay a flat brokerage charge on the executed trades.

Here is a list of a few top discount stockbrokers in India:

5) Brokerage comparison while using full-service vs discount brokers

Let’s compare the brokerage charges of a full-service broker compared to a discount broker.

A full-service broker charges commission as a fixed percentage on every trade their clients execute. This commission can be somewhere between 0.25–0.55% of the overall trade. Here, the bigger is the transaction, higher is the brokerage.

On the other hand, the discount broker offers a flat brokerage charge. This charge can be somewhere between Rs 10–20 per trade.

Moreover, these charges are applicable to both sides of trading. Therefore, when you buy a share, you’ve to pay brokerage and when you sell these shares, you again have to pay these charges.

For example, full-service broker ICICI Securities that charge 0.275% as brokerage on Intraday trading. Therefore, the total brokerage in a trade will be 0.275%* 2 = 0.55%, if we include both buying and selling.

If you make an overall transaction of Rs 5 lakhs per month with ICICI direct, the total brokerage in a year will be equal to 0.55% * 5,00,000 * 12 months = Rs. 33,000

Now, let us look at the brokerage charges offered by discount brokers. The popular discount brokers in India like Zerodha or Upstox charges Rs 20 per trade.

Let us assume that you make 20 trades per month using such a discount broker. Here, your total brokerage in a year will be Rs 20 (brokerage) * 20 trades per month * 12 months = Rs 4,800.

Clearly, you can notice here that you can save a lot of brokerage charges while opting for discount brokers. Moreover, both these brokers provide a similar trading platform and hence overall experience is not much different. Overall, you are paying some un-necessary brokerage while trading with full-service brokers.

6) What factors to check while selecting your stockbroker?

Brokerage charge is one of the biggest factors to look at while picking your stockbroker as an expensive broker can hurt you financially.

Apart, the second biggest factor to check is the reputation of the stockbroker. A stockbroker with a long history of a reliable trading platform and good customer service should be preferred.

When you are opening your trading account with a stockbroker, it’s a long term relationship. You might trade in stocks for years after opening your account. And here, you do not want your brokerage firm to be shut down in between and all your bought equities getting trapped with them. Therefore, while picking your stock broker, first always check the reputation and reliability of the stockbroker. A simple google search or reading the reviews by the existing users can help to find red flags.

Besides, you need to look into their web and mobile trading platforms, advisory services (if you are looking for trading advice), customer service and other perks offered by that stockbroker like research reports, trading/investing education, etc.

7) Where should you open your demat and trading account?

By now, you would have got a decent idea regarding stockbrokers in India. Next, let’s discuss the central topic of this article- where should you open your demat and trading account.

If you are looking for multiple services like shares, mutual funds, bonds, currencies, fixed deposits, commodities etc along with research reports and do not mind paying a few extra bucks for additional services, then you should open your account with full-service brokers like ICICI direct, HDFC securities, etc.

However, personally, I believe that if you planning to trade just in stocks (or commodities), opening accounts with discount brokers is more advantageous. They offer a fast trading platform with a low brokerage charge which helps traders to save a lot of money.

Moreover, with the rise of the internet, most of the information that you need to make trading/investment decisions are freely available online. If you want to read the research reports on companies, they too are freely available on websites like Trendlyne, markets mojo, etc.

Note: If you really need advisory to buy and sell stocks, it’s better to go with expert advisory services in this field, who can offer you personalized services rather than relying upon these big corporates for whom you might be a very small client.

8) Which stockbroker do I use?

I use Zerodha discount broker for making all my traders.

Initially, I started my investment journey with ICICI direct. The reason I opened my account with ICICI was because of their good reputation and 3–in-1 account service facility.

3-in-1 means that you can open your saving, demat and trading account all at once. So, while opening your savings account with ICICI bank you can apply for the other two accounts as well.

I was happy with the services offered until I realized that I was paying too much brokerage charges and a chunk of my profit was paid unnecessarily to ICICI direct. Then, I started researching other stockbrokers where I can save these charges. Finally, I switched to Zerodha, the discount broker and I’m happy with the trading platform and services that it offers.

Note: You can read my complete review on Zerodha stockbroker here.

Further, if you’re interested to open your account with Zerodha, here’s the direct link to fill account opening application!

Closing Thoughts

In this online era, buying and selling stocks is as fast as the click of your fingers. All thanks to the online stockbrokers.

There are many stockbrokers available in India and through this post, I tried to help you how to choose a broker for trading in stocks. If you still have any queries regarding where to open your demat and trading account, feel free to comment below. I’ll be happy to help you out.

Have a great day and happy investing!

Kritesh Abhishek

Hi, I am Kritesh, an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting

www.linkedin.com/in/kriteshrules/

How to buy a stock using SBI demat account? State bank of India is one of the biggest public sector bank in India. After the merger of the SBI with its associate banks (State Bank of Bikaner and Jaipur, State bank of Hyderabad, State bank of Mysore, State bank of Patiala and State bank of Travancore), SBI has entered the league of top 50 global banks with over 500 million customers and 22,500 branches.

Because of this huge number of customers in state bank of India, the number of demat and trading account holders in SBI are also high. However, many of such users do not know how to use their demat account yet or are in process to learn how to buy a stock using SBI demat account and use it for trading.

Therefore, in this post I am going to teach you step-by-step procedures about how to buy a stock using a SBI demat account. So, be with me for the next 10-15 minutes to expertise the skills of how to buy a stock using SBI demat account. Further, this post is divided into three sections- Pre-Research (Things to do before buying a stock), How to open a SBI demat and trading account and how to buy a stock using sbi demat account. I will advice the readers not to skip any section and read step-by-step to get the full understanding of how to buy a stock using SBI demat account. After reading this post, you will be able to easily start trading using SBI demat and trading account.

Pre-Research and Things to do before buying a stock.

Buying stocks are easy when you know what to buy. The common advice on the stock market is ‘Buy low and sell high’. But the problem is that no one explains how much is low and how much is high. Overall, the procedure to find an undervalued stock is not that easy.

However, just like playing the guitar, stock market investing is also an art which has been learned with practice and patience. Practice is required to expertise the subject. Patience is required to safeguard yourself from witnessing losses. There are over 5000 companies listed in Indian stock market. And among these, you need only 5-6 stocks in your portfolio. Never rush to buy a stock without doing the proper analysis. That’s why both practice & patience is equally required to become successful in the stock market.

The first step before buying a stock is to figure out how much you want to invest. Keep in mind that you should always invest the additional cash left over after meeting all the day-to-day requirements. In addition, do not invest if you require the money in near-future. For example, do not invest the money that you need to pay them for your kid’s next semester tuition fee. You do not want to risk your child’s future for the short-term market gains.

Second, research the company carefully before investing. Remember, you should always invest in companies, not stocks. There is a company behind every stock and if the company is constantly performing great, the stock will also give good returns over the long term. Start with getting the basics ideas about the company like what products/services the company provides, what is the recent growth of the company in its sectors, who are the major competitors of the company, how bright is the future of the company etc. Read the financial statements like balance sheet, income statement, cash flow statement etc of the company in detail. Compare the financial ratios with the peers. Although, there are a number of factors that should be considered before investing in a company in share market, however, few key financial ratio analysis are listed here.

Earnings Per Share (EPS) – Increasing for last 5 years
Price to Earnings Ratio (P/E) – Low compared to companies in same sector
Price to Book Ratio (P/B) – Low compared companies in same sector
Debt to Equity Ratio – Should be less than 1
Return on Equity (ROE) – Should be greater than 20%
Price to Sales Ratio (P/S) – Smaller ratio (less than 1) is preferred
Current Ratio – Should be greater than 1
Dividend Yield – Depends on Investor preference. Regular dividends for last 5 years favored.

Read more here: 8 Financial Ratio Analysis that Every Stock Investor Should Know

After studying the financial ratios, and if it meets the above-mentioned points, analyze the companies financial statements in depth. Look at the sales, profits, revenue etc. A constant growth in these over last 5 years should be favored. Lastly, find what this company is doing that its competitors are not which will give it an advantage against other companies in its sectors.

Once, you have studied the company carefully and are satisfied with its performance and expected future growth, then you can proceed further.

If you want to learn stocks from scratch, I will highly recommend you to read this book: ONE UP ON THE WALL STREET by Peter Lynch- best selling book for stock market beginners.

How to open a SBI Demat and Trading Account?

My friend recently opened an SBI Demat and Trading Account. It’s super simple and hassle-free. The whole procedure to open your trading and demat account take around 15 days. SBI also offers 3-in-1 account i.e. Saving+Demat+Trading account.

For opening your account, first, you need to call on the number provided on the SBI’s contact page. You can know the charges to open the account and other details on the same customer care number. Here is a link to the page: https://www.sbismart.com/contact-us On calling the support number, the customer care will ask for your details and the suitable time to meet you and bring the account opening form for getting signed.

In addition, the support executives will themselves come to collect the required documents to open the account. Here is the list of the documents required for opening the demat and trading account:

2 Passport-size photos.
PAN CARD
Aadhar Card (for address proof)

How to buy a Stock using SBI demat account?

Step 1: Search ‘SBI Smart’ on Google or go to https://www.sbismart.com/. On the home page, click on login and select ‘Trade login’ in the drop-down menu. Here is the snapshot of the steps shown:

Click on ‘Login’

How to buy a stock using SBI demat account

Select ‘Trade Login’

Step 2: Enter your login details. You will need your ‘Client Code’. ‘Password’ and ‘PAN Card’ to login. You will get these details via email, once your account is opened. If you are first time user, then SBI will ask you for a one time password with ‘Client code’. You will need to change to a new password after entering.

How to buy a stock using SBI demat account 2

Enter your login credentials

Step 3: After you logged in, you can notice the menu on the top ‘Dashboard/ Trade/ Market/ Tools/ Research/ Customer Service’.

Click on ‘Trade’. This will open the ‘Order Entry Page’.

How to buy a stock using SBI demat account 3

Order Entry Page

Step 4: Next Step is to transfer fund to your demat account. For transferring funds, scroll down on the ‘Trade’ Page. You will find ‘LIMITS’ option after scrolling down on the same page. Here, click on ‘MANAGE’. A snapshot of the page is shown below

How to buy a stock using SBI demat account 4

Click on ‘Manage’ in Limits to transfer funds.

Step 5: After clicking on ‘Manage’, the ‘FUND LIEN’ Page will open. Now, click on the ‘FUND LIEN’ option on the right to as shown below.

Please note that there is also an option of ‘FUND UNLIEN’. This is used in the case when you transferred more amount than required to your demat account or when you couldn’t buy the stock. In these cases, you can transfer funds from ‘Demat’ account to your ‘Saving’ Account using ‘FUND UNLIEN’.

How to buy a Stock using SBI demat account 5

Click on ‘Fund Lien’

After clicking on the ‘FUND LIEN’, it will redirect you to the payment option. Enter the amount which you want to buy stocks. For example, if you want to buy stocks using Rs 10,000; enter ‘10000’ in ‘Amount in Figure’ and click on ‘LIEN’. Here is the snapshot of the page:

Enter the amount and click ‘LIEN’

Next. it will redirect you to the NET Banking page. Enter your login credentials (Username and password) and then complete the payment.

SBI net banking page

Step 6: After completing the Step 5, you have transferred the funds to your demat account. You can check the transferred fund by going to ‘LIMITS’ on ‘TRADE’ page and viewing the ‘Net Lien Amount’. This will be equal to the transferred amount.

Step 7: Next step in to buy the stock. Go to the ‘TRADE’ option on the top menu and this will again open the ‘ORDER ENTRY’ page. It will look like this:

Next, follow the below-mentioned steps to buy the stock:

Select Equity (By default it should be equity. However, if it not, then select ‘Equity’).
Then select the preferred ‘Stock exchange’ beside ‘EQUITY’ Option. There will be the options of NSE (National Stock Exchange) or BSE (Bombay stock exchange). Select either NSE or BSE. It doesn’t make much difference which stock exchange you choose. Both are almost similar.
Besides the stock exchange, enter the name of the stock you want to buy and click on ‘GO’.
For example, if you want to buy NHPC (National hydroelectric power corporation), then enter NHPC in the blank provided.
After clicking on ‘GO’, the ‘market price’ of the entered stock will be shown along with the ‘bid’ and ‘ask’ price. Notice the market price carefully and decide whether you want to buy that stock or not.
Next step is to choose the ‘Order type’. There are two types of order type- ‘Market’ or ‘Limit’.
- The ‘Market’ order type will buy the stock at the current market price. For example, if the current price of NHPC stock is Rs 30.20 and you want to buy this stock at that market price, you should select ‘Market’ option. Further, please note that the market price fluctuates too fast and it might change till the time you click on ‘BUY’. Therefore, decide quickly if you want to buy on the ‘Market Price’ or not.
- The second option is ‘LIMIT’ option. Here, you can select the amount at which you want to buy the stock. For example, if you want to buy the NHPC stock at Rs 29, then you can place the order type as ‘LIMIT’ and enter the price of Rs 29.
- Further, please note that its easier to buy stocks at ‘Market’ price as there are many sellers at market price at that moment of time. However, the sellers might not agree to sell their stocks at the ‘LIMIT’ price you are asking. In this case, you might not be able to buy the stocks. When placing a ‘LIMIT’ order type, place the limit amount logically by following the trends.
After selecting the order type, enter the ‘Quantity’ (QTY) of the stock you want to buy. For example, if you want to buy 10 stocks of NHPC, then enter 10 in the QTY option.
Finally, click on ‘BUY’ after carefully checking the details

Step 8: After clicking on ‘BUY’, a confirmation page will appear. Click on ‘Confirm’.

After confirming the order, you have successfully placed your order. You can verify this by going to ‘ORDER BOOK’ present on the same page. Scroll down to the ‘TRADE’ page, and you will find the ‘Order book’. Once the order is successfully completed, you can check the stocks bought at ‘TRADE BOOK’ option, present on the same ‘TRADE’ page.

In addition, here is a video of the order entry which can help you further. (Source: Demos Sbismart)

That’s all! You have finally bought the stocks using SBI demat account. Congratulations!!!

Tags: how to buy a Stock using SBI demat account, how to buy and sell stocks using sbi, how to buy stocks using sbi, how to buy a Stock using SBI demat account and trading account, trading how to buy a Stock using SBI demat account

Kritesh Abhishek

All posts tagged: Trading account

Where to open your Demat & Trading account?

Where to open your Demat & Trading account?

1) Difference between demat and trading account?

2) Do you need a stockbroker to trade in stocks?

3) What is a stockbroker?

4) What are the types of stockbrokers in India?

— Full-service brokers

— Discount brokers

5) Brokerage comparison while using full-service vs discount brokers

6) What factors to check while selecting your stockbroker?

7) Where should you open your demat and trading account?

8) Which stockbroker do I use?

Other Frequently Asked Questions (FAQs) regarding trading and demat accounts.

1) How to open your demat and trading account?

2) Can I open multiple accounts?

3) Can I switch my previously purchased stocks from one demat account to another?

4) How to close your demat account?

Closing Thoughts

How to buy a Stock using SBI demat account?

Pre-Research and Things to do before buying a stock.

How to open a SBI Demat and Trading Account?

How to buy a Stock using SBI demat account?

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