How To Get Extra Income Through Demat and Trading Account?

Demat and trading accounts are your first essential equipment to step into the world of stock trading. Choosing the right service provider is a critical step to ensure you control your expenses. Most people open a trading and demat account to dip certain savings in the stock market to try their “luck”. However, this approach rarely gives stable results and approaching trading like a science rather than a gut- feel, the process will yield better results.

While profiting from trades is your aim, ensure you apply these strategies to earn extra income from your stock market activities.

Costs on Demat and Trading Accounts

The first step is to create a demat account. Pick a broker who offers charges that suit your trading frequency. You should have an option to switch to a flat rate for a certain number of trades if you are unsure of how much you will actually trade. Discount brokers offers you the option to trade at low brokerage rates. Full-service brokers will usually charge higher than regular brokers owing to the services of relationship management and research they provide. So choose a cost-friendly broker.

Buying and Selling Timing

While it is not possible to exactly time your trades for the lowest buys and highest sells, using research and thumb rules in technical analysis can help you get quite well within the affordable range. One can know the market sentiment towards an industry or particular stocks based on news and predictions about performance or any material information. You should ensure you do not fall in the trap of blindly investing in a stock without understanding its short term and long-term sentiment.

Technical cues will give you the right idea on when to sell a stock within a profitable range. 

Multiple and Smaller Volumes

Unless you are a professional trader who tracks stocks all day, it’s better to take a smaller value of bets in day trading and not go for assets (commodities/derivatives) which you might not be familiar with. Take small positions on new trades and focus on small profits rather than huge windfalls. This way you end up taking less risk and over a period of time, your earnings will be quite good.

Using Stop-Loss Option

Greed and fear are the biggest enemies of successful stock trading. Knowing when to stop waiting and closing the position is key to minimizing your loss. Sometimes, more than experience or gut-feel, a disciplined approach of selling a stock once it falls beyond a level, saves much more money. Put a stop-loss on your trades to avoid last minute panic selling in case the markets turn out of favour.

Staying Updated

Watching the news and staying updated on industry news, the happenings on specific stocks will give you a 360-degree view of what could go right or wrong for the share price. It’s important to keep various scenarios in place of your trade if share sentiment turns either way. Technical analysis will help you plan the prices to enter and exit.

Thus, extra income through trading is all about making smart and disciplined moves over a period of time. Ensuring your costs are minimal will help you stay invested for a long time.

Gaurav Khanna

Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.