Trading account Archives

A complete guide on where to open your Demat & Trading account (Updated): 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. It is the biggest stockbroker in India with over 2 million happy clients. Zerodha offers free equity delivery long term investments (zero brokerage) and a discount brokerage of maximum Rs 20 for all other trades.

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. Basically, 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. Moreover, I am able to save huge brokerages after switching to Zerodha, which is always beneficial for small retail investors like you and me.

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

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

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 (Tweet me here), 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/

A short guide on how to buy a stock using SBI demat account – SBI Smart (Updated)? State bank of India is 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 active number of demat and trading account holders in SBI is also high. However, even though they have a 3-in-1 account, many such users do not know how to use their demat account. Or many are yet in the process to learn how to buy a stock using the SBI demat account and use it for trading.

Therefore, in this post, we are going to discuss step-by-step procedures on how to buy a stock using SBI demat account. Be with us for the next 10-15 minutes to learn the skills 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 to buy and sell your favorite stocks.

However, before we start this post, let me quickly summarise the key features and charges while trading in stocks with SBI. Let’s get started.

Introduction to SBI Cap Securities

SBICap securities is a trusted brand and subsidiary of State Bank of India (SBI) with an aim to offer trading facilities to the SBI clients. Being a subsidiary of the largest national bank in India, the SBI cap has got over a million clients with a demat and trading account. They offer full service to their clients like investing/trading in stocks, derivatives, currency, mutual Fund, IPOs, ETFs, Bonds, FDs, Insurance, and more.

Charges and Brokerages

Account opening charge: Rs 850
Annual Maintenance Charge (AMC): Rs 500
Delivery Trading charges: Higher of 0.50% or 5 Paisa per share
Intraday Charges: Higher of 0.15% of 5 Paise per share

Trading Platform: SBIcap offers the SBI Smart web trading platform for trading in stocks, mutual funds, commodities and more.

The biggest advantage of trading with SBIcap securities is that they offer a 3-in-1 account. That is, users can open savings, demat and trading account, all at one place. Moreover, being an umbrella platform to invest in stocks, bonds, mf, fds etc with large office presence also makes it attractive for the clients.

On the downside, a few disadvantages of trading with SBI cap is its high brokerage charges (compared to the newly fastly growing discount brokers) and below-average customer service.

How to open SBI Demat and Trading Account?

We have already published a detailed article on how to open demat and trading account at SBI, earlier. You can read that article here. Anyways, let me give a quick summary of the account opening process with SBI.

Opening an SBI Demat and Trading Account is super simple and hassle-free. It can be done either online or offline. SBI offers a 3-in-1 account i.e. Saving + Demat + Trading account. If you already have got a saving account with SBI, then you just need to open a demat and trading account. The whole procedure to open your trading and demat account takes around 5-7 days if you open offline by visiting its office or calling a customer care executive.

For opening your account, first, you need to call on the number provided on the SBI’s contact page. Here is a link to the page. After calling the support care number, the customer care will ask for your details and a 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: PAN CARD, Aadhar Card (for address proof) & Passport-size photos. If you already have a bank account with SBI, you need to submit bank proof like canceled cheque or bank statement.

How to buy a Stock using SBI demat account?

Now that you’ve got a basic understanding of SBIcap securities, let’s discuss the main topic of this post i.e. how to buy a stock using SBI demat account. To trade in stocks using SBI demat account, follow the following steps.

Step 1: Go to SBI Smart website

Search ‘SBI Smart’ on Google or directly go to the SBI Smart website using this link. On the home page, click on login and select ‘Trade login’ in the drop-down menu. Here is the snapshot of the steps shown:

Step 2: Enter your login details.

On the SBI smart page, 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.

Step 3: Go to Order Entry

After you logged in, you can notice the different menu on the top like Dashboard, Trade, Market, Tools, Research, Customer Service’. Click on ‘Trade’. This will open the ‘Order Entry Page’.

Step 4: Transfer funds to your demat account.

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

Step 5: Fund Lien

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 extra amount than required to your demat account or when you couldn’t buy the stock. In these cases, you can transfer funds from the ‘Demat’ account to your ‘Saving’ Account using ‘FUND UNLIEN’.

After clicking on the ‘FUND LIEN’, it will redirect you to the payment option. Enter the amount for 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:

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

Step 6: Check the Lien Amount

After completing 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: Place Trade Order

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:

1. Select Equity (By default it should be equity. However, if it not, then select ‘Equity’).

2. 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.

3. 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.

4. 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.

5. The next step is to choose the ‘Order type’. There are two types of order types- ‘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 the ‘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 the 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.

6. 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.

7. Finally, click on ‘BUY’ after carefully checking the details

Step 8: Confirm your Trade

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 the ‘TRADE BOOK’ option, present on the same ‘TRADE’ page.

Congratulations. You have finally bought the stocks using SBI demat account!!!

Also read: Different Charges on Share Trading Explained- Brokerage, STT & More

Summary

SBIcap securities offer one of the most popular demat and trading accounts with full-broker service to their clients. In this article, we discussed on how to trade in stocks using SBI smart. Besides, here is a short video of the order entry which can help you further to understand placing order.

(Source: Demos Sbismart)

That’s all for this post. I hope this article on how to buy a Stock using SBI demat account is useful to you. If you have any doubts related to trading in SBI demat account, feel free to comment below. I’ll be happy to help. Happy investing & trading!

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Kritesh Abhishek