As an investor, you must understand how to purchase and sell shares online by using a demat account. A demat account acts like a repository for the stocks that you purchase online. However, you cannot buy or sell shares through a demat account. For that, you need a trading account that executes the buy and sell orders that you place. Once you execute a buy order, the shares get credited to your demat account on the T+2 day. Upon selling the shares, they get debited from your demat account and the money gets transferred to your demat account on T+2 day. As a demat account is an integral part for investing money in the stock market, it is compulsory to know how to open demat account before you start trading in shares or any other securities.
How to buy IPOs through a demat account?
An IPO (Initial Public Offering) is a stock that is not listed in the stock market yet. When a company launches its IPO, it will reflect in your demat account. A specific date will be decided up till which you can bid for it. You need a demat account to place your bid for any IPO. If you are only interested in IPOs, you don’t need a trading account.
The company decides the price of one IPO stock but you need to buy it in lots. Each lot contains a specific number of shares. You need to add the required amount to bid for the IPO on your demat account. Once you place the bid, the money will be automatically debited from your demat account. However, as multiple retail investors bid for the same IPO, the company cannot allot its shares to all the bidders. The bidders are chosen randomly and if you get selected, you will be notified via an email or SMS.
The companies usually take up to 7 days to allot the IPO stocks. However, if your bid doesn’t get selected, the money will be automatically credited to your demat account India. Once the IPO stock gets listed on the stock exchange, its price may fall or increase. Therefore, you can decide to keep the shares or sell them to book a profit or avoid a loss as per your trading acumen.
What is a 3-in-1 account?
Buying and selling stocks can be done easily through a demat and trading account. However, you need to link your demat account and trading account with a bank account. These days, stockbrokers allow you to open a 3-in-1 account that consists of all the three accounts i.e. a bank account, demat account, and trading account in one account. It makes the trading process seamless and hassle-free. If you don’t need a bank account, you can link your existing bank account with your demat and trading account.
Before investing money in the stock market, you must learn all its basics. It includes learning about market segments like equities, currencies, derivatives, Futures and Options. You must also be updated with the latest economic news and trends that can affect the price of stocks. You can also trade online through trading apps that are developed by the trading platforms. Therefore, investing online through a mobile app is also possible these days. Apart from investing, you can also keep track of your stocks and their movement through mobile apps.