An investor who is new to the stock trading market will need to have an online stock trading account with a stock trading brokerage firm, because it is not easy to understand how and where to invest in a short period of time. Stock traders need to keep a close watch on the stock trading market regularly, gauging the performances of the individual companies as well as the overall sectors the companies belong to. These factors affect the rise and fall of the share prices, and hence the need to know when to buy or sell a stock. This comes as a reliable and convenient way for the investor to make effective decisions regarding his investments in the stock trading market.
An investor will need a demat account with a registered depository participant, which can be a bank or a brokerage firm, and a trading account with the brokerage firm linked to the demat account. The demat account will hold the stocks of the investor in a dematerialized or electronic form, unlike years back when the shares were in the form of physical certificates. The trading account will allow the stock trading, i.e. the buying and selling of stocks with the registered stock broker or dealer. Stock trading in India has grown very popular with more people trying their hands at it. And many of the leading private banks of India like ICICI Bank, IDBI Bank, HDFC Bank, SBI Bank, BOB Bank and Axis Bank are providing for the opening of a demat account and trading account together, along with a savings account.
The service charge rendered by the broker on the investor is known as the brokerage fee. And an investor interested in stock trading should find a broker who levies the lowest brokerage on him. In such a case, the brokerage fee will not eat up his profits, and the purpose of the investor to hire a broker in the very first place will be solved. An investor can choose from the type of brokerage account or broker as per his financial requirements. There are full-service brokers who offer extensive investment advice to their clients, but charge a very high fee for the efforts they put in. But usually, the online brokers are preferred by investors as their need of a secure platform for trading is fulfilled at a relatively lower price. The investor can also choose from various other factors, such as the variety of tradable assets, the tools used for analysis, or the speed of order execution and the extent of margin money, to decide on the type of brokerage account.
Hence the idea of getting an online stock trading account with a brokerage firm turns out to be the best only when it can provide its services with the lowest brokerage fees.