
Online trading has changed the face of investing for stock market investors globally. With the digitisation of the stock exchanges and brokerage accounts, the complete procedure of investing in the market, trading shares and securities, holding the securities, and monitoring your holdings has become faster, easier, and extremely cost-efficient. All this has given a major facelift to how stock trading is done.
Online Trading- What it Offers
The process of stock trading has moved from its erstwhile physical form to a completely paperless and digitised format.
- Unlike earlier, traders need not visit physical exchanges or run from post to pillar to get the physical certificates of their holdings.
- New Demat account opening has become quick with the use of the online account opening application process and can be completed in as few as 15 minutes with efficient brokerage houses.
- Additionally, there is no fear of your share certificates getting lost or stolen as they are transferred from the seller to the buyer electronically.
- Not only is this process faster and safer, but it is also much cheaper and minimises significant carrying, holding, and transferring charges.
- Online trading reduces the expense and stress involved in trading for the investor. The investor needs to simply pass an instruction to his depository participant and place his buy or sell orders with him. This can be right from the comfort of one’s home, using a secure internet connection and a mobile phone or a personal computer.
- For the ease of their customers, various top stockbrokers have launched their websites and mobile apps that the investor can access to make trades in the market.
- These web applications also offer detailed research analysis on various stocks that help investors make more informed decisions while investing in the market.
- Investors also get to know about the upcoming IPOs with these online stockbroking apps and websites.
- Investors now have the option of selecting between a full-service broker and a discount broker as per their trading requirements. Discount brokers offer various brokerage packages to investors, so the investor chooses the package that corresponds to his volume of trading. This has significantly reduced the cost of trading for investors as now you pay only for the services you use, and that too is charged nominally.
Demat Account Charges You Should Be Aware Of
Apart from the account opening charges, you also need to be aware of certain other charges that you would have to pay to trade in the stock market. While selecting your depository participant, you can compare these charges between different brokerage houses to see which one fits your needs and budget.
- Demat account opening charge: Earlier the fee would go as high as Rs. 700-900 for some banks and stockbrokers but now, some leading brokerage houses open your Demat (full form dematerialised) account for free.
- Annual Maintenance Charges (AMC): Also known as folio charges, this fee can range anywhere between Rs.300 to 900 per year. Some trusted stockbrokers waiver the AMC for the first year under some of their subscription packages to help new investors keep their costs under control.
- Transaction charges: Each time stocks are debited or credited to your brokerage account, your stockbroker charges you a transaction fee. While some stockbrokers may charge a flat fee every month as transaction charges, others may charge you for every transaction you make.
- Custodian fees: Since your depository participant takes responsibility for the security of your shareholdings, you have to pay Demat safety charges to your DP. Some DPs do not charge these fees from their customers as they need to pay it only as a one-time fee to the depository. This fee can be anywhere between Rs. 0.5 to 1 for every International Securities Identification Number, therefore, this is also an important factor while looking at the costs associated with stock trading.
- Other charges: Other fees such as stamp duty and GST are also a part of your investing costs.
By comparing these costs among different brokerage houses and using the online trading mechanism, you can make an informed decision and bring down your stock trading costs.
Also read:- Bajaj Financial Securities Now Offers Margin Trade Financing at 8.5% per annum