Understand Stock Market Regulation: Steps Needed for Traders to Open an Account


People interested in the stock market have an eye on the stock brokers. These brokers help the traders to make money doing the trades. The main things they need to do the trades include knowledge of the market movement. They also need a trading account.

Regulatory bodies in India

The reason they need a trading account is that only licensed bodies can do trade on the foreign exchange market. The traders can operate through the services of the brokers. You have two kinds of brokers, the full service or regular broker and the discount broker. The traders choose the top discount brokers since they provide the best service. There are many reasons why there is regulation on the stock market.     The first reason is that the controlled environment helps keep unfair practices in check. The financial system in India remains regulated by independent regulators. They act in the field of pension funds, commodities market, capital market, insurance, and banking.

The apex body in the country in the financial sector is the Reserve Bank of India. This body remains owned by the Government of India in full. The second is the Securities and Exchange Board of India (SEBI) which controls the market regulation. It determines the opening and closing time of the market. It can change the time if it thinks that they need such a move. It provides the licenses to the traders and brokers to operate on the market. The government keeps a close watch on the movement and practices of the market since it impacts the financial future of the country.

Contact the brokers

Suppose you want to open a trading account, the first thing to do is to approach the brokers. Get the rates, compare them, and then choose one to open your trading account. Then, they ask you to fill up the account opening and KYC documents. Submit this along with the proof of identity and the proof of address. They will verify the details and then allow you to open the account. How do you know who the best discount brokers are?

Set aside money first

You can check the features offered and the cost of opening an account. These factors will show you whether they are good or not. Once you have established this and paid the fees, you can begin to trade. Before you enter the trade market, you must make sure that you have enough money to do the trade. For this, you must set aside the money you need for your daily expense including the money for the food, the family, and the education of the children, savings for the future, and so on. Then, with the money that remains, you can make the trade.

At least, you need to set aside six months’ salary as protection against loss. It is possible that you will lose all your money on the stock market. If such a situation arises, then you will use the money you set aside to get out of the crunch situation. The next thing is to determine what type of style to adopt in the investment. This means you must decide if you want to invest for a long time or you want short-term gains. Then, you are ready to go.