What is share trading?
Share trading means buying and selling the shares of companies listed on the stock exchange to make a profit. Online share trading involves buying and selling stocks through an online platform. Using the online share trading account, you can easily buy or sell share stocks, mutual funds, bonds, and other securities without the need for an intermediate broker or agent.
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, so he holds a 10% stake in the company. As a result, shareholders get a say in the company’s governance and can vote on critical decisions of the company.
While this may be advantageous for those who control a larger portion of the company’s shares, for a retail investor, the benefit of owning a share is derived from their potential price appreciation in the share markets. Thus, 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 are share prices determined?
The demand and supply of shares decide the share prices. If a company is expected to earn better profits, more investors flock in to own its share, leading to its price rise. Similarly, negative sentiment about the company makes more investors sell its shares, bringing down the price. Profit-seeking investors will either buy and sell on the same day or take a position for days before squaring it off. This brings us to the next aspect of share market trading, which is trading vs investing.
Difference between trading and investing
Trading refers to the 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 the case of day trading or intraday trading, traders have to close the positions within the trading hours. If not closed, open positions get squared off at market closing price. But whether you want to be a trader or investor, you should be aware of the share trading time in the 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 India's two primary stock exchanges. The trading time for the equity market in both the exchanges is between 9:15 AM to 03:30 PM, Monday to Friday.
How to start trading?
To start trading, opening a demat and trading account is the first step. It is not possible to trade directly in the stock exchange. A stockbroker registered with SEBI (securities and exchange board of India) and stock exchange provides you with the facility to open a 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 identity proof to open an account.
Additional Read: How to open demat account?
Open a 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 a 100% paperless process. Just follow these steps:
- Visit the account opening form.
- Enter your details like name, mobile number, email, and PAN.
- Provide your bank details and your complete address.
- Choose an annual subscription plan.
- Upload KYC documents for proof of address and identity, photograph, signature on white paper, and cancelled cheque. To trade in futures and options, additional income proof must be submitted.
- Perform an in-person verification by recording a short video of yourself.
- E-sign the form through OTP received on your Aadhar linked mobile number.
- Submit the application.
Add money to your trading account:
- After account opening, you will receive the login details and password.
- 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.
- Add money from that bank account to your trading account. (You can transfer the funds back to your bank account as well).
- You can create a watchlist of your favourite company, keep 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 percentage of the transaction value as brokerage. They provide additional services such as stock recommendation, advisory services, and customized reports, and hence the charges are on a higher side. On the other hand, discount brokers provide demat and trading accounts and the basic tools to help you make trade decisions by yourself. As a result, the charges are comparatively low, usually a flat fee per transaction, irrespective of the transacted value.
With Bajaj Financial Securities limited, you can get the benefit of a flat fee per trade and save significantly on brokerage costs. Share trading is one of the investment avenues that can help in the potential growth of wealth to accomplish your life goals. The more you understand about share trading, the more benefits you can draw from it.
Frequently asked questions (FAQs) on share trading:
How does share trading work?
Share trading means buying and selling stocks of companies listed on the two leading stock exchanges - Bombay stock exchange (BSE) and national stock exchange (NSE). The buyer of the shares gets certain ownership in the company. He is entitled to a percentage of stake in the company. He buys it using the trading account opened with a depository participant (DP) or broker. The shares purchased get stored in his demat account.
The idea of trading is to make profits by selling the same shares at a price higher than the buying price later when the price moves.
What does share trading require?
The trader should have a trading account to buy or sell shares in the stock exchange and a demat account to store them electronically. You should link your trading account to a bank account so that you can transfer the amount for the purchase of stocks. In addition, you should have some basic knowledge of how buying and selling on the trading platform works. Also, keeping yourself abreast of the market developments will give you various trading ideas.
Why do we trade shares?
Share trading is beneficial to those who understand the underlying reasons for the movement of stocks and the stock market. In addition, it is considered a lucrative investment as the returns on investment is high in a short duration.
Share trading also gives you ownership of the company. You can search for the next good purchase to hold and earn profits using various fundamental and technical analyses. Trading in the stock market is also a way to buy into the economy's growth story and profit from the highs.
Is online share trading risky?
The share price of the company varies based on the demand and supply of the shares. Therefore, there can be a sudden price drop when there is adverse news about a company. The trader can either exit the position or hold it based on the market performance. If the market updates are not followed closely, it may turn out to be risky.
How to open an online share trading account?
You can open an online trading account with Bajaj Financial Securities from the comfort of your home within 15 minutes.
The documents required to open a trading account are a PAN card, proof of identity, address, and bank details.
- Open the application form.
- Fill in all the mandatory information like PAN details, bank details.
- Upload the essential documents for proof.
- E-sign the form.
- Submit the application.
Your login details get updated upon activation.
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