How to buy stock with the help of broker?


Read this article to know about the stocks and shares. And also to know how to buy stocks. This article also give you the function of a broker in trading through stock exchange, and also the different types of trading in stock exchange.

What is a stock?


You all know about stocks, in the news or papers etc. But often you may get the doubt about what it is? The stock is nothing but the business entity that a founder of business invests capital. That is it may be a company or business enterprises. Some of the examples of stocks are, Reliance communication private LTD, MTNL, MARUTI, TATA etc. You can buy or sell your stock to other person. The following paragraphs will give you details about how to buy or sell stocks. You can buy the stocks from stock market.

What is share?


A share is a part of the stocks. That is a stocks can be divided into number of shares. For one stock there are number of shares are available. People can buy a number of shares of stocks or sells to other persons. The buying and selling depend upon the cash that hold by the person who are dealing with this trade. You can buy the number of shares of stocks from the stock market. A share has certain face value. This will be decided by the company. By changing the face value, the number of shares you hold may increase or decrease according to the change. For the ownership of a share there is certificate issued. That is a stock certificate, which is the legal form for the ownership of a share.

What is demat account


The share ownership is designated by issuing a stock certificate. Early time, this is in the paper form. When a person sold out the stock he needs to sign the back of the certificate, and send to the company after the approval, this will give to the buyer. This type of trading is materialized trading, and it was difficult or cumbersome. So we need to trade in the dematerialized form of trading. That is the exchange of share holding through an electronic form. In this the shares are not in paper form and they were held in electronic form with database as depositary. The depository may reduce or increase according to sell or buy of the stocks. This type of dematerialized trading is made possible through demat account. Currently almost all trading are in demat form. You need to open a demat account for trading in stock exchange. That is for selling or buying the stocks. Read this article to know how to open demat account.

What is broker account


Most of the trading of stocks is carried out through stock exchange. You will not see the person who buy or sell the shares you exchange. You can't deal directly with stock exchange. For dealing with stock exchange for exchange of shares you need to use a broker who is registered with stock exchange. For this you need to open a trade account through the broker. This account is known as broker account. A broker will sold or bought the shares on your behalf, according to the request made by you. There are two types of brokering are available, one is online brokering and other is offline brokering. Compared to other online brokering is good in my opinion. Because in offline brokering you need to meet the broker on all the time of your trading occur. And this will be a cumbersome method, because of taking time and delay. In online brokering you don't need to go for the broker, in the time of exchange. And the basic advantage is that you may not get miss leaded due to the advice of others. In online brokering you can take your own decision while trading, any how you got some advice from the expertise. Broker will charge some commission as brokerage fees for every trading made by you. This will vary for different broker company. A broker will send you contract note on everyday you perform trading.

Transfers from bank account


Most of the online brokers are provided the facility of transferring cash from your bank account. This will be available if your bank has the feature of online bank account. You can transfer the required money from your bank account to your trading account through bank transfer. And you can also transfer the money from the trading account to the bank. The transferred fund from bank to your trading account is designated as ledger balance. That is the fund available in your trading account is known as ledger balance.

Types of trading in share market


  • Intraday trading: Intraday trading is the type of trading, in which you have to buy or sell the stocks within the day limit. That is you can buy the shares at any time of market opening and sell before the closure time. Intraday trading provides you the feature of short selling. Short selling is defined as the selling of the stocks even there is no stocks are available with you or hold by you. The advantage of intraday trading is that you can buy or sell the stocks for the amount of four times of your margin. This type of trading is not only easy and profitable but also risk and loss causing. You should have analyzed stocks within short time. You should be high cautious while trading through intraday. An insensible trade may give you high loss, or sensible trade may give you high profit.
  • BTST trading: BTST is the abbreviation of Buy today sell tomorrow. Most of the brokers are provided this facility of trading for you. In this type of trading, the shares buy today can be selling today or tomorrow. Short selling is also available in BTST trading. This also give you profit loss, according to the change in the price of shares. You should be cautious on every trading.
  • Delivery trading: In delivery trading, you can buy or sell the stocks at any time of the market open. The facility of short selling is not available in delivery trading. This trading is not much risk. But you should be cautious while handling. Here you can invest for long term profit, midterm profit etc. The thing you should make in mind that the share you buy should be good balanced share. Otherwise losing of the stock price will cause you high loss. When you buy or sell the stocks in this type, the stock will go to your demat account as depositary data base.
  • Mutual fund trading: Mutual fund trading is other type of trading related to the stocks. In this type of trading both the investor and the company of invest has equal risk. In this type of trading an investing company collects the investment from many people and invests it in certain stocks. The loss and profit will be shared for all the investors. Brokers are also providing you the feature of transaction of mutual funds.
  • IPO: IPO is the abbreviation of Initial public offer. The companies are announcing IPO before listing to the stock exchange. People can buy the stocks before listing in stock exchange through the public offer made by the company. Most of the brokers provide you the facility of buying the stocks through IPO.

Some of the online brokers


Online brokers are the business corporation which will provide the customers the facility of trading in stock exchange through online. There are number of online brokers providing this service. Some of them are listed below.
  • ICICI direct
  • Sharekhan
  • Indiabulls Securities Ltd
  • HDFC Securities Ltd
  • Reliance Money
  • Geojit BNP Paribas
  • Kotak Securities Ltd
  • Angel Trade
  • SBICAP Securities Ltd
  • 5Paisa

Procedure of buying stock


For trading in stock exchange you should have demat account and also trading account. For buying a stock through online mode, you need to place an order which will indicate the stock and the price of stock you decided to buy, and also the number of shares. You need to place the order or give the request to the broker. The broker will make the purchase for you from the stock exchange on behalf of you. The order will execute if the price and number of the shares satisfy with current price of the stock and the number of available shares.

Procedure of selling stock


Procedure for selling the stock is also similar to buy the stock. You have to place an order that containing the number of shares and price of shares you like to sell. This request will send to the exchange by the broker. And the current situation of the stock satisfies the price, the order will execute. You have to mention which type of trading you are following while placing an order.

Conclusion


Trading of stocks is carried out by stock exchanges. The customer can able to trade in stock exchange through brokers. The brokers will send your order to the exchange on behalf you for the trading. The broker must be registered with stock exchange for doing this. The buy or sell of stocks will be highly cautious thing. Since your insensible move will make you a great loss.


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Comments

Author: Pravat Kumar Das03 Sep 2014 Member Level: Gold   Points : 4

This is a well and Good explanation to start up and giving over all idea about how to start share trading and some technical words.

I want to add some more points.
Now days every body wants earning higher money,and if you have learnt the right things then stock market is the quickest and smart way to make extra money.

Choose always low brokerage provider broker.
which saves some of your invested amount as you pay lesser charge for each of your transaction.

Learn which stock you should choose for short term and which should for longer term.

Always plan to become a long term investor but book part profit if you are getting profit in quick time or before your target day achieved.



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