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How to Start Trading- An Introduction

One has a lot of dreams and expectations, when we hear “I got an X% return on my investment” or “today’s trading session was so good, made a lot of profit”. To reach here, a person first needs to understand and learn what stock market is all about. And mostly traders today are so confused from where to start and where to invest.

In this article, I will discuss how to start investing or trading? What should be your first steps as a beginner?

But before that one needs to understand: to invest or trade in the stock market one needs a broker, who in turn will act as a medium, from where you can buy or sell securities. There are many brokers in the Indian market today and again a lot of confusion among traders whom to chose.

To simply, brokers in India are basically categorized in 4 sections: bank based brokers, full service brokers, discount brokers and commission free brokers.

A bank who offers trading or investment services are known as bank based broker. These brokers are also categorized under full service broker category sometimes. Some of the bank based brokers are: HDFC securities, ICICI direct, Kotak securities etc

A full service broker is someone who offers various other facilities like research and tips. Do keep in mind, that these brokers offer not concession on the commission charges. The brokerage is levied on your trading volume, no discount. Some of the full service brokers are: Motilal Oswal, Alice Blue etc.

A discount broker is the one who offers you commission at a discounted rate. These brokers came into existence because of high brokerage charges levied by the full service broker and have been ruling the market ever since. Mostly discount brokers offer you trading at a flat rate, to save your cost. Some of the discount brokers are: Zerodha, Upstox, Fyers etc.

Now, last but not the least, commission free broker.

A commission free broker, as the name suggests, offer you trading at zero brokerage. You don’t have to pay a single penny with these brokers as brokerage. These types of brokers came into existence to overcome the flat rate brokerage and in my opinion; they are been able to do so. There services are just like what are offered by discount broker, just at a lower cost which is why they are being applauded everywhere. Some of the commission free brokers are: Finvasia and Wisdom Capital.

Now, once you are done with which type of broker you want to choose for trading.

Next step is to open a demat and trading account: A demat and trading account can be opened with the broker itself. Now remember, along with account opening charges, you will have to pay a fixed amount every year to the broker in the name of AMC (annual maintenance charges). Now every broker charges different for account opening and AMC. Here is a video of top brokers and their account opening charges:

Try and chose a broker with who offers you good services at a lowest cost.

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