Investing in stocks has been the recent trend and rightly so. Although anyone can partake in this activity, it is wise to do some research before starting investing. There are certain terms and definitions you should be aware of before making your first investment. Two of these terms are the Demat account and the Trading account. Many people mistake one for the other, but both these terms are completely different, yet used quite closely. Before we delve deep into the nitty-gritty of how to open a free Demat & trading account, let us understand the basic difference between both concepts.
What is a Demat Account?
A Demat account is used to convert the physical shares into an electronic form, thereby dematerialising them. The functions of this kind of account are similar to that of a normal bank account. Here, your shares and securities are kept and debited or credited accordingly. You need not own a single share to open a Demat account and you can even open Zero cost account.
What is a Trading Account?
A Trading account is used during transactions involving shares. With this account, you are granted access to conduct certain stock trading activities. One can also say that a Trading account is just a link between your normal bank account and your Demat account. Once you buy or sell shares with your Trading account, shares are either added or removed to your Demat account in electronic form, depending on your activity.
Now that we have got a basic understanding of a Demat and a Trading account, let us see the procedure that is required to follow to Open free Demat & Trading account.
Steps to Open a Demat and a Trading account
As mentioned earlier, the Demat account and the Trading account are used almost simultaneously while dealing in stocks and shares activities. Despite the closeness with which both the entities work, there are minute differences between the application process of both. Therefore it will be beneficial for us, especially those who are aspiring stock traders, to know the application processes for a free Demat account and a free trading account separately.
How to open a Demat Account?
Follow these steps to open your Demat account.
Step 1: Contact a Depository Participant, who is an agent of that particular depository or institution. The list of all the Depository Participants can be accessed on the website of Central Depository Services (India) Ltd. and National Securities Depository Ltd.
Step 2: Fill the account opening form carefully. At this stage, you will also need to provide the required documents to the said institution for identification purposes.
Step 3: Now, you will be required to sign an agreement that lays down all your rights as well as duties as an investor. Remember to take a copy of the same with you, as it is your right to do so.
Step 4: After all the paperwork is done, your Demat account will be opened and you will be given a Demat Account Number, which is also known as Beneficial Owner Identification Number.
How to open a Trading Account?
The following steps are to be followed if you wish to open a free Trading account in your name with any financial institution.
Step 1: The first step is to look around and find the perfect broker or firm for you. Make sure to compare and study the charges levied by each firm. Being able to open a zero cost account will be a bonus.
Step 2: Establish contact with your preferred firm and let them know of your decision of opening a trading account with them.
Step 3: Here, you will be asked to fill the firm’s account opening form, where you will be required to show certain documents for authentication.
Step 4: After the form is filled, the firm will take some time with its verification process.
Step 5: Once verified, the firm will provide you with your trading account details. Now you are ready to go into the world of the stock market and try your hand.
One important aspect to remember is the fee imposed while opening a free Demat & Trading account. You should carefully compare the charges applied by each firm or broker. You should also be wary of any additional expense you may have to incur later. The ideal scenario would be to open zero cost account and there is a number of firms and broker, offering free Demat and Trading services.
Open a free Demat and Trading Account with LKP Securities
We have already seen how we need to scope our choices and choose a firm that fits our needs and demands. Apart from mainstream financial institutions, many financial service providers provide a helping hand to amateur stock traders. These also come in help for seasoned professionals to be in touch with the constant changes occurring in the market. One such service provider is LKP Securities Limited. They have been a big name in the industry of financial services since 1948.
Apart from their numerous services and facilities, they also allow their users to open free Demat & Trading account quickly and efficiently. They need only a matter of 15 minutes, from the point they receive all the necessary documents, to open your Demat and trading account. Their easy-to-understand online application process mentions beforehand the documents required like a PAN card, a photograph, your income proof, etc. This unerring application process is very suitable for those who are beginning their journey as a trader. Hence, LKP Securities makes sure to make the lives of their users much simpler and easier.
We can understand how important, especially for an aspiring trader, it is to understand the intricacies of the stock market. With the ever-expanding stock market, it is a good time to invest in stocks, shares, and other commodities. To do so, you must open up a Demat and a Trading account. Choosing a trusted firm becomes the first step towards a smooth and hassle-free trading journey.