Factors You Should Check Before Opening A Demat Account

With so many options available in the market, an investor can get easily baffled while choosing a demat account provider. A demat account is provided by a DP (Depository Participant) who acts as an intermediary between the central depositories and investors. The DP must be registered with CDSL (Central Depositories Services Limited) or NSDL (National Securities Depository Limited). Apart from checking the authenticity and reputation of the DP, you can check the below factors while opening a demat account and trading account online:

Charges associated with a demat account

An account opening fee can be charged by the DP. Most DPs waive off these charges but some of them charge a nominal account opening fee which is a one-time charge. You also need to check the brokerage rates charged by various DPs. A discount broker will charge a fixed rate for every trade irrespective of the trade volume. The charges may vary as per the trade type and market segments in which you trade. 

For instance, the brokerage charged for intraday trading is usually higher than the delivery trading brokerage. However, as the brokerage is fixed and does not change according to the trade volume, you will end up saving money, especially if you trade frequently. Full-service brokers charge a percentage of the trade volume as brokerage. Therefore, the brokerage could be quite high in this case. 

DPs also charge an AMC (Account Maintenance Charges) as a maintenance fee on a yearly basis. Some DPs waive the AMC for the first or first two years of service. Other demat account charges include custodian fees, dematerialisation fees, rematerialisation costs, etc. Choose a DP only after going through all these charges as it will help you grab the most affordable brokerage services in the market.

Trading platform 

The trading platform provided by a DP must be user-friendly and accessible through web and mobile apps. You must be able to maintain multiple watchlists, set stop-loss, buy/sell stocks, and perform other activities seamlessly by using their trading platform. 

Ease of opening account

Most DPs provide an online account opening facility these days. However, it would be better if you get to verify your account online through video calls and other online mediums. The account opening procedure should also be quick enough to help you get started without any delay.

Learning materials

If you are a beginner or newbie trader, you will have to learn the trading basics first. After that, you will have to understand how to use different trading and investment tools. You can catch up with professional traders only if you get acquainted with trading terms and concepts. However, for that, you must get access to different types of learning resources. The brokerage firm or DP with whom you have completed the demat account opening online process can provide you with these learning resources. 

The learning resources can be in the form of PDF files with illustrated live trading examples to explain difficult trading terminologies. Some DPs also provide you with strategy-building tools to fine-tune your trading strategies. You can also avail of the paper trading facility to gain some idea of trading before trading with real money. 

Also, different learning resources must be available for different instruments. For instance, a DP can provide you with an online course to hone your skills in futures and options trading. However, going through the entire course can be cumbersome if you are only interested in options and also in options selling. Chapter-wise or concept-wise segregation of topics would help you to get a quick idea of your preferred trading instruments.