FAQs by New Investors About Trading on the NSE

About Trading on the NSE

National Stock Exchange is one of the two largest stock exchanges in India. It was established in 1992 as a tax-paying company and was recognised as a stock exchange in 1993. If you are about to begin your equity trading journey on the National Stock Exchange, there are a few important things that you should know about this exchange.

National Stock Exchange and Bombay Stock Exchange are the largest stock exchanges in India. While the latter was founded in 1875, the former was only founded in 1992 and has quickly gained prominence in the equity market. In fact, the daily turnover of the National Stock Exchange is almost 10 times that of Bombay Stock Exchange on most of the days. As BSE has lower liquidity, the traders, especially intraday traders, prefer trading on the National Exchange.

If you are planning to begin your equity trading journey, there are a few important things that you should know about the National Stock Exchange.

  1. What is Equity?

In simple words, shares or stocks are known as equities. When you invest in equity, you invest in the shares of a company. The price of the stock rises as the company grows. Several studies have proved that the equity markets outperform all the other types of investments in the long run.

However, it is important to know that not every equity investment will offer similar returns. While equity market is highly rewarding, it is equally challenging too.

  1. How can I  trade equity on the National Stock Exchange?

To start trading on the stock exchange, you need a Demat account and a trading account.  The Demat account is where the purchased stocks are stored in the electronic form. The trading account works as an interface between your Demat account and your Bank account.

The money you have in your trading account can be used for buying and selling stocks. Several brokers and banks offer a Demat and trading account.

  1. Are there any charges for equity trading on the Exchange?

Yes, exchanges charge ETC (Exchange Transaction Charges) which is the most important source of income for the exchange. ETC is a small charge on the total turnover of your trade. This fee is charged for every trade you place. You can find details about the ETC charged by the exchange on the Contract Note of a broker.

However, you don’t have to pay the fee directly to the exchange. Your broker will collect it from you and pay the same to the exchange. Apart from the ETC by the exchange, you’ll also be required to pay brokerage to your broker for every trade.

  1. How Can I Place a Trade?

This depends on what services your broker offers. Your broker is an interface between the exchange and you. Most of the brokers allow you to place trades on the phone and through the internet. In fact, the National Stock Exchange is the first exchange in India that brought electronic trading to the country.

Apart from this, a lot of brokers now also have their mobile apps which you can use to place trades.

  1. What are the Stock Exchange Market Timings?

Equity trading on any of the two exchanges can be done from Monday to Friday except on holidays declared by the exchange. The regular trading session begins at 9.15 am and ends at 3.30 pm. There is a pre-open session between 9.00 am to 9.08 am and closing session between 3.40 pm and 4.00 pm.

These are some of the most important things that you should know before you start trading on the Exchange. As a beginner, make sure that you first try to know what kind of trader you want to be and then work on a strategy to achieve your objectives. Read up more about the stocks trading on the NSE and valuable advice from the experts before you begin. Happy Investing!

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