A Demat Account

Do You Have A Demat Account? Check These Points To Avoid Losses

 Do You Have A Demat Account? Check These Points To Avoid Losses

After opening a demat account, you can hold different securities like bonds, mutual funds, ETFs, stocks, etc. in it. However, to avoid losses, you must understand how to start trading online in the share market. You must verify whether the shares you have bought have been credited in your demat account or not. Usually it takes T+2 days for the shares to be credited in your account. If you observe all these things, you will be able to trade smoothly and avoid losses in the stock market:

Don’t hurry while taking a position

When you buy or sell a share with an intention to book a profit, you are taking a position. However, you must not take a position simply because of a minor event or news. You should not invest in a stock only because others are after it. Do your research, learn to read the charts, and invest in shares only after conducting a deep study on the company profile and current standings in the market.

Fundamentally strong stocks

Picking stocks that are fundamentally strong is essential for investing wisely. Historical data can often vary with time and therefore, one must not just the worth of a stock merely on its past performance. There are large, small, and mid-cap companies. Large cap companies are usually fundamentally strong as they are established businesses with a market cap of Rs. 20k crore or more. These businesses have a huge influence on their respective industries and are stable. Therefore, investing in these stocks will help you to minimise losses while trading.

Checking the Price-To-Earnings ratio (P/E ratio) is also essential as it helps you to analyse whether a stock is undervalued or overvalued. Therefore, you must always compare P/E ratios of various stocks before choosing the right ones for earning a profit. .

Short-term and long-term strategies

If you are interested in earning profit by investing money over a short-period, intraday trading can be your ideal option. You will have to buy and sell a stock within the same day by expecting to earn a profit by analysing the real-time movement of a particular stock in the NSE or BSE indices. The stockbroker will also charge a brokerage fee on a per day basis. A full-service broker usually charges a percentage of the transaction whereas a discount broker will charge a flat brokerage for every transaction. Therefore, to cover these charges and to book a sizable profit, you need to indulge in a large volume of stocks every day.

When you hold a stock for more than a day, delivery brokerage charges are applicable on the same. You can invest in delivery trading for attaining your long term investment goals. The investment could be either in stocks, mutual funds, bonds, or commodities. Monitor your stocks daily and update yourselves with the latest news and events that might affect the performance of the stocks in which you have invested. Set a stop-loss trigger to prevent huge losses in delivery trading.

Apart from these things, you should also check the AMC (Annual Maintenance Charges), demat transaction charges, securities transfer fees, and other fees charged by various stockbrokers before your apply for demat account. Go for the discount brokers who demand a flat fee per transaction instead of charging a percentage of the entire trade. These things will help you to minimise the losses due to excessive brokerage. Also, if you own multiple demat accounts, AMC and other charges can reduce your profits significantly. Therefore, open only a few demat accounts that are utmost essential for trading and investment purposes.

 

 

 

 

 

 

 

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