Step-By-Step Guide on How To Buy Stocks Online
Investing in stocks is not as complicated as it may seem for beginners. However, to start the process, you should research and learn the trading lingo before making the first investment. Today, when the whole process is digitalized, it’s easier than ever to buy stocks. If you have a trading and a Demat account and have some money, you can easily buy stocks online of a publicly-traded business.
This article will talk about the step-by-step process of investing in stocks online and how you can become a successful investor in the Indian stock market.
Choose a Broker Carefully
First and foremost, you will have to research the stockbrokers to choose one for yourself. The simplest way to deal in stocks in the stock market is through an online broker. So, once you have opened your trading and Demat account, the broker will help you deal in stocks. You can either go for full-service brokers or discount brokers. Most brokers will not charge any commission for trading on your behalf. However, you will need to pay a brokerage fee that differs from one broker to another.
Open a Trading Account and Demat Account
If you have already chosen a stockbroker for yourself without opening the trading or Demat account, you can do that in the next step. The Demat account will hold your shares once you receive the delivery. Also, the process of trading account creation is pretty simple, and you will need to provide a few basic details like address proof, identity proof, PAN card, and cancelled cheque. Once the account is created and activated, you can reset the password and start your trading process online.
Read : How to open Demat Account Guide In Detail?
Fund Your Trading Account
Next, to buy shares online, you will need to have sufficient funds in your trading account for short-term delivery, long-term delivery, or intraday delivery. You can fund your trading account through IMPS, NEFT, or UPI. Only when your account is sufficiently funded, your online stockbroker will permit you to start trading in the stock market.
Research About Stocks You are Interested in
Before you invest in stocks online, you need to screen through the available options properly. Please go through the companies' annual reports, screen their stocks on parameters of ROCE, profitability, ROE, etc. This research and screening process will help you execute your trading orders seamlessly.
Many stockbrokers will also offer the investors a ‘call to action’ strategy. If your stockbroker does the same, you can go through the stock reports and directly execute trading from the same place with just a few clicks.
Select the Right Price and Order
Once you have gone through the stock reports, you can take the help of your stockbroker to identify the right level of entering the stock and executing the stop-loss strategy accordingly. Of course, always try to find the best stock price possible. Also, take care of the way of placing the order. For instance, if the share market is volatile, try to put the stop-loss order properly so that you can avoid further losses and get the price of your choice.
Do the Follow Up Once the Order is Placed
Your job will not end once you have placed your order. Therefore, you should also follow up with the order book to understand if your order is getting reflected properly or not. For checking the execution status, you should refer to the trading book. The trading book will reflect only the executed orders.
Whereas the Order Book will show the open orders. If you are unhappy with the value, you can always cancel or modify the order before it is executed. Once the trading process is completed, you need to double-check the contract notes, along with a weekly follow-up with your Demat and ledger accounts.
Keep Your Trading Accounts Secured
Finally, you need to ensure that your trading account and Demat account passwords are always protected. It would help if you chose a password as complicated and tough to crack as possible. Do not write down your account passwords anywhere. Also, make use of dual authentication for your trading account. Whenever your trading account is not in use, make sure to log out of the account from all devices. Do not download any suspicious software or games on your device. Update your device with anti-virus regularly. Last but not least, never use your online trading account or Demat account in public places like cyber cafes, etc.
Also Read: Dematerialiasation of Securities
Now that you are quite familiar with the stock trading process, start researching the best platform to buy stocks in India. So, if you had the question, how to buy stocks online, you now have the answer to the same. Always remember, opening a trading account is undeniably a great first step, but you should still need to dig deeper into understanding the whole process of stockbroking to experience gains in the long run.
Share Market Knowledge Centre
- Demat account
- Share market
- Trading account
- Online share trading
- Intraday trading
- Futures trading
- Commodities trading
- Currency trading
Volume Weighted Average Price (VWAP) - An Overview
There is no dearth of jargon in online share trading, ranging from ones that cause new traders and investors to scratch their heads to ones that confuse even seasoned ones. Amongst the terms unique to share trading is Volume Weighted Average Price, which is commonly referred to as VWAP.
What do you mean by Illiquid Stocks?
Illiquid stocks are the ones that will not easily liquidate your money and cannot be readily sold or exchanged for cash without a significant loss in value. Simply put, illiquid stocks contrast with liquid stocks in the stock market. For an organisation, for example, illiquidity means that a business doesn’t have the required finances to take care of its debts....Read More
How to Participate in Buyback of Shares?
Buyback of shares is when an organisation buys back the shares from its promoters or shareholders, thereby dropping the total number of shares in the share market. These are carried out mainly in two different ways; an Open Market offer and a Tender offer. Let’s dive a little deeper into the buyback of shares meaning below....Read More
Frequently Asked Questions
If you open a trading account with no minimum balance and zero transaction fees, you can start investing in the stock market with just enough funds to buy a single share of a company.
You may but the online brokers have made it easier for beginners to invest in stocks recently. For most beginners in broking, an online brokerage account will be the right and the easiest way to get into the share market.
You’ll never really know the right time to invest in stocks. However, if you’re interested in investing for the long term, then the right time to buy stocks will be as soon as you have the required funds in your trading account.