Skip to main content

What is the significance of having DEMAT Account?

By
Demat Account stands for dematerialized account. In this account, all the securities and shares which a trader holds is electronically placed.A trader has to open this account with a registered broker or discount broker.The process of conversion of shares into electronic form is known as dematerialization. Once your Demat account has been opened you will get a specific account number and a DP ID number which has to be retained by the trader for future communication.

Earlier traders possess physical copies of all the shares and securities which they hold and it was really difficult to preserve those copies. With Demat account, several traditional trading barriers have been removed. Some of the biggest advantages of Demat account are discussed below:

1)It is a time-saving approach to trading. Within a fraction of second traders can transfer, buy and sell shares using their Demat account without wasting much time.

2)In one single account all the mutual funds, equities, shares, bonds can be held. No separate account for different securities is required.Also at one place traders can check the status of different securities. They do not have to visit separate different accounts to do so.

3)Chances of losing physical certificates by some means like robbery, theft get reduced. And no more traders have to worry about the security of shares which they have in physical form earlier.

4)All orders are securely placed with the depository participant. Therefore traders do not have to visit different companies whose shares they are holding again and again.

5)Traders can trade in any number of shares even 1 by having Demat account which was not possible earlier when shares were physically held by the traders in the form of certificates.Traders can take a decision on the basis of their investment goals entirely and not have to focus on any other constraint.

6)The unnecessary cost of issuing and distributing physical copies of shares by the companies has been eliminated. Although now also if a trade wishes to have a physical copy of his shares he can. He just has to make the request for the same and pay its charge.

To begin with trading in equities, shares, bonds etc the primary step is to open Demat account. Without this, a trader can not begin with trading.With Demat account, Indian capital market has gained several benefits in last few decades and also made the entire process of trading very easy.


However, it has a disadvantage as well. As this has made the entire process online, that is the Internet is a must. Traders who lack in having knowledge about the Internet or not skilled enough to use it find it difficult to trade. But yes there are brokers who can trade on their behalf, overcoming this barrier for them by charging commission.
Labels:

Comments

Post a Comment

Popular posts from this blog

How to open a Demat account and what benefits are offered by dematerialization?

By
With the introduction of new technologies trading in the stock market has changed a lot. Earlier when BSE was formed in 1875 at that time traders and investors used to stand on floor and shout prices of stocks for buying and selling. The money was exchanged between buyer and seller and a physical copy in the form of certificate was issued to the buyer.The entire process was very time-consuming. In 1996 concept of dematerialization was introduced in share market. Physical copies of shares were replaced by electronic form and were credited and debited from the Demat account of a trader. Following are the benefits offered by dematerialization : 1)Common bank In Demat account along with shares, other financial instruments like bonds can be stored as well. Traders can use the same account to trade in stocks and bonds both. 2)Time and cost To deliver a physical copy of shares cost is involved and also it takes the time to do so. With dematerialization, this cost and time c...
Post a Comment
Read more

What is meant by stock market trend and its types ?

By
Market Trend Stock market is of highly volatile nature and we often notice ups and downs at stocks price charts on daily basis. To some extent market trend is responsible for these movements in stocks prices. Understanding market trend is very much important to perform quality technical analysis. In general term market trend is broad upward or downward movement in a stocks price over a period of time. As we know stock prices can be volatile and does not necessarily follows a straight line by zooming price chart a defined market trend can be identified. Discount brokers offers such necessary details about market trend, price charts and more on their trading platform itself. Three major types of market trends are discussed below : 1) Uptrend When market is following upward trend then at that time both tops and bottoms of a stock chart keeps on increasing. Everyday stock price touches a new high and falls lower than it did on the earlier day. Do not frame a misconception th...
Post a Comment
Read more

How would you differentiate between Traditional brokers and Discount brokers?

By
A brokerage firm is a financial institution that enables traders and investors of stock market to buy and sell financial securities. To execute any contract in stock market two parties are required buyer (long position holder) and seller (short position holder). Basically a broker act as an intermediary between buyer and seller and facilitates them to trade on various financial securities. In return brokerage firms receives compensation in the form of commission/fees once the transaction has been executed. We have two types of brokers : 1)Traditional Brokers 2)Discount Brokers Traditional brokers or full service brokers are the oldest brokers in stock market. They usually undertake more then simply acting as an intermediary to execute the trading process.There services also includes proper researching of stock market to offer necessary recommendations to stock market players as well.Often these firms also offers margins loans in addition to certain client to purchase investment on cre...
Post a Comment
Read more