Recently I came through a query that ‘where does one shop for stocks’.It is an interesting question.It may look funny to those who are familiar with the financial markets.But for new entrants to markets arena,the question ‘How to buy Shares’ remains a puzzle.
This question was from a youngster who wanted to trade or invest in stock markets.Obviously,he was completely new to the concept of stock markets.The answer to this question,though not difficult to find,but can be sometimes challenging if you don’t know anything about the functioning of markets like from where to start but want to take the exposure of markets.Still more, when there is no one around you to help or guide through.
In my earlier days of 2007,when I wanted to start trading the markets,I also faced the same question.Nobody around me to guide,it was really going difficult and delayed.If you are in similar situation today,this post might be of help to you.The purpose of writing this post is very much that.
To be more basic, all the Stocks or Shares trade on various Stock Exchanges in any particular country.There is Nasdaq for America, Tokyo Stock Exchange for Japan and National Stock Exchange and Bombay Stock Exchange for India.All the stocks listed on respective stock exchange trade there.
If you want to trade or ‘shop’ the stocks,you can do it in two ways; Online and Offline.
Online – For Online buying or selling of stocks,you would need to have an account with a securities broker.This account is known as Demat Account.Demat word is derived from Dematerialized. It means the stocks you buy are held in Electronic form in your account instead of physical delivery of any documents showing the stocks you own.Demat Account is linked with your savings bank account and cash is allocated from savings to Demat account when you want to buy the stocks.
In your Demat Account,you will find all the stocks tradable on a stock exchange and you can place your buy or sell order conveniently by logging into your account on your broker’s website.You can buy or sell any stock any time during trading hours in your Online Account.
Offline – If you don’t want to operate your account Online,you can visit the branch of a securities broker in your locality.You deposit your cash with them.You would need to tell them in which stock you want to place your order and how much quantity you want and they will do that for you.They will charge brokerage charges of you for placing your order.These charges are higher than the brokerages you incur while doing trades in Online mode by yourself.
I hope this article shall give an overview about how to buy shares.For more info on to do list for buying the stocks,you may want to head over to getting started with trading in the stock markets for new entrants in financial markets.If you have any query you are welcome to start the discussion in comments section below.