How to Open Demat Account for Commodity Trading
Opening a Demat Account to start commodity trading is quite an easy process and just requires some documentation formalities to be completed before you start trading the commodities. The first step is to select the best brokerage firm to open your account and this company will manage your trades. Opening a Demat account is a must, as using this account an investor can buy, sell and hold shares in the stock market.
There are three kinds of Demat accounts available:
- Regular Demat Account: This type of Demat account is used by the traders who are resident of India.
- Repatriable Demat Account: This type of Demat account is used by the NRIs and the funds would be transferred abroad. It also an associated NRE bank account.
- Non-Repatriable Demat account: This type of Demat account is also used by the NRIs, however, the difference is that in such accounts the funds cannot be transferred abroad, and hence, an associated NRO bank account is necessary.
Difference Between Demat Account and Trading Account
Many of the new investors would think that opening Demat and Trading simultaneously is a must. However, this is not the case, if someone wants to only invest, then shares of your choice would be added to his Demat account but he cannot sell these shares. Hence, if one wishes to buy as well as sell the shares then a trading account is necessary along with the Demat Account.
Steps to Open a Demat account
- Select the Brokerage Firm: The first step is to select the best-suited broker firm that is tech-savvy and offers the best brokerage commission as per your requirement.
- Submit the Commodity Trading Account Form: This form requires details such as financial status, age and trading experience of the trader.
- Verification of Form: It takes generally 2-3 days to get the approval.
- Deposit Funds in the account: The trader is required to deposit the initial and maintenance margin in his account.