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Share Trading: Everything You Must Know About It

  • Highlights

  • Buying and selling shares in stock market

  • Trading and Investing differs

  • Demat and Trading Account is a perquisite

Q: What is share trading?

A: Share trading means buying and selling the shares of companies listed on the stock exchange with an aim to make profit.

What happens when you buy a share?

When you buy a share, it means you start owning some stake in the company. For example, if a company has issued 1000 shares, of which an investor owns 100 shares, it means he owns 10% stake in the company. Shareholders get a say in the company’s governance and can vote on key decisions of the company.

While this may be advantageous for those who control larger portion of company’s shares, for a retail investor, the benefit of owning a share is derived from their potential price appreciation in the share markets. Investors try making profits from share trading by selling shares at a higher price than the purchase price. But then the question arises, what causes share prices to change in the share market?

How share prices are determined?

Share prices are determined by the demand and supply of the shares. If a company is expected to earn better profits, more investors flock in to own its share, leading to its price rise. Similarly, a negative sentiment about the company makes more investors to sell its shares, bringing down the price. Profit seeking investors will either buy and sell on the same day or will take a position for days before squaring it off. This brings us to the next aspect of share market trading- trading vs. investing.

Difference between Trading and Investing

Trading refers to short term buying and selling of shares. Day Trading, for example involves squaring off positions within the same trading day.
Investing on the contrary is buying and holding the shares over a longer term, which can be for days, months or years, before selling it.
In case of day trading, or Intraday trading, traders have to close the positions within the trading hours of the same day. If not closed, open positions are squared off at market closing price. But whether you want to be a trader or investor, you should be aware about the share trading time in Indian stock market.

Additional Read: Difference Between Demat and Trading Account

Share trading time in India

The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are the two primary stock exchanges in India. The trading time for equity market in both the exchanges is between 9:15 AM to 03:30 PM, Monday to Friday.

How to start trading?

Having covered the share trading basics; now it’s time to jump on the bandwagon and make the first move.
To start trading, opening demat and trading account is the first step. It is not possible to trade directly in the stock exchange. A stock broker registered with SEBI (Securities and Exchange Board of India) and stock exchange provides you the facility to open demat and trading account. Demat Account holds the shares in digital format and trading account helps you transact in the stock exchange. Both are essential to trade in the share market. You must have a PAN Card, Bank Account, and documents for proof of address and proof of identity to open an account.

Additional Read: How To Open Demat Account?

Open demat and trading account with Bajaj Financial Securities Limited and start trading

With Bajaj Financial securities you can open your demat and trading account in less than 15 minutes through 100% paperless process. Just follow these steps:

  • 1. Visit the account opening form

  • 2. Enter your personal details like name, mobile number, email, PAN Card Number

  • 3. Provide your bank details and your full address

  • 4. Choose an annual subscription plan.

  • 5. Upload KYC documents for proof of address, proof of identity, photograph, signature on white paper, and cancelled cheque. To trade in Futures and Options, additional income proof has to be submitted.

  • 6. Perform an in-person verification by recording a short video of yourself.

  • 7. E-sign the form through OTP received on your Aadhar linked mobile number.

  • 8. Submit the application.

Add money to your trading account:

  • 1. After account opening, you will get the login and password.

  • 2. Log in to your account and visit the Fund Transfer Section. The bank you added during sign up will be linked to your trading account.

  • 3. Add money from that bank account to your trading account. (You can transfer the money back to your bank account as well)

  • 4. You can create a watchlist of your favourite company, keep a track of its price and place a buy order when you want.

Share trading brokerage charges

When you start trading, charges will be levied on your share market transactions by the stockbroker, which is a fee for the services provided. A full service stockbroker will charge a per cent of the transaction value as brokerage. They provide additional services such as stock recommendation, advisory services and customised reports, and hence the charges are on a higher side. On the other hand, there are discount brokers, which provide demat and trading account and the basic tools to help you make trade decisions by yourself. As a result, the charges are comparatively low, normally a flat fee per transaction, irrespective of the transacted value.
With Bajaj Financial Securities limited, you can get the benefit of flat fee per trade and save significantly on brokerage costs.
Share Trading is one of the investment avenues that can help in potential growth of wealth to accomplish your life goals. The more you understand about share trading, the more benefits you can draw from it.

Disclaimer: Investments in securities market are subject to market risk, read all the related documents carefully before investing. Visit our website for other Terms & Conditions.

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