For anyone interested in investing in the stock market one big question occurs in their mind Can I Trade Without A Broker? They don’t need any physical hassle or a third-party broker they can do so by opening a Demat account. In the physical mood, there are many lengthy papers works need to do for account opening. But the online brokers don’t require any paperwork. It’s very easy to open a Demat account with all other facilities like trading and SIPs etc.
A Demat account is backed by eighter the National Securities Depository Limited (NSDL) or National Securities Depository Limited (NSDL). Which is regulated by Securities and Exchange Bonds in India (SEBI). With these securities, the investors can store securities, shares and bonds in their Demat account and sell it, when ever they want to do so.
If anyone is seeking trading and has a question in mind can I trade without a broker then this is the correct article for you and you are in the right place.
Can I Trade Without A Broker?
Generally, many traders might know that to buy or sell they need a broker. The broker will execute the transaction on behalf of the trader and the brokers charged a brokerage fee from the investors for this process. Many small traders are not willing to give that charge and want to make the trade without a broker to avoid the brokerage fee. But most of them don’t know about the no brokerage concept that selling and buying of stocks can be done without a broker with zero brokerage fees.
Another option for trading without a broker is a Direct Stock Purchase Plan (DSPP).
The DSPP allows the investors to buy stocks directly from the company or an authorized institute and sell it. Thus traders can save the brokerage money. But in the same the investors have to pay the brokerage money to the online brokers/sub-brokers to execute the trade. Let’s know what is DPSS and how does it work and how it defines the answer to Can I Trade Without A Broker?
Understanding Direct Stock Purchase Plan (DSPP)
Usually, to buy or sell stocks without a broker the easiest way is a Direct Stock Purchase Plan. The company sells its shares to investors through the DPSS method. This is a business model, which is invaded years ago for the small investors to trade without any broker to wipe out the brokerage charges.
A company will set out the minimum expenditure for the initial buy and sell as well as any subsequent transactions. These minimum expenditures can occasionally be lower than the price of one share, which might enable investors with less cash to look for modest stakes in the company. The plan administrators pool the money from participants in the direct stock plan and use it to buy company shares at market price.
The direct stock purchase plan delivers statements with crucial financial information to the investors as a bank works for its customers. This plan provides some relevant services such as a list of the number of shares you own, any dividends you’ve earned, and any purchases or sales you’ve made. It is much similar to the banking facilities and also much easier for the beginners.
In the DSPP method, the company directly transfers the stocks to investors using any third-party organization. Usually, the bank work as the third party authority. Sometimes the company does it on its own.
Hopefully, this mentioned definition will make you understand DSPP and can answer this – Can I Trade Without A Broker? This is the basics of the DSPP plan. Before using this method you should know the pros and cons of DSPP.
Pros Of DSPP
The best advantage of DPSS is the investor doesn’t need to pay extra brokerage for purchasing and selling to any broker. Also, this system provides good communication between the investor and the company. In the brokerage system investor has to choose the order type but in DSPP, just send the money to the right place and they will do the rest for the investor. This is the simple feature of the plan.
When you use any broker to invest there you can buy multiple options and choose different stocks. The discount brokers provide these features to attract more customers. But through DSPP in one plan you can only one company’s stock. So, if the company will send you any important notice you may lose it in the broker’s app inbox. But if you invest through DSPP the company will contact you directly and you will be updated timely.
Cons Of DSPP
As there are a lot of advantages to DSPP and there are many disadvantages also there. We talked about the no brokerage but there is initially opening an account it needs 250$ to 500$ to invest. Also, it automatically charges fees from investors for investment which is depend on different companies.
The online brokers are easy to handle and flexible. You can operate it from anywhere just the internet. So it’s very easy to sell or buy at any time. But DSPP is not as like so. So on DSPP, you can’t invest for short time, whereas on an online broker’s Demat account it is easily possible for a short time investment.
Another con of DSPP is that it has lack of diversification. There are minimum options in DSPP for traders. They have limited options for trading, but in a Demat account, there are multiple options for trading.
Instead of DSPP, more people like to use a Demat account. To open a Demat account is easy and hassles. Follow this steps and open a account for yourself.
Invest With A Demat Account
It’s very easy to invest in stocks using a Demat account. You just need to contact Depository Partner (DP). It doesn’t require anu third party broker. Here is the following steps:
- Choose a DP either CDSL or NSDL.
- After that contact DP and request to open a Demat account.
- The DP will provide an application form. Fill it out and submit it.
- Then process with the e-KYC details and submit it.
- Attach your identity and address proof. Such as Aadhaar, PAN number, driving license, ration card etc.
- Add your income proof as salary pay slip or 6 months bank statement.
- They will verify the details and open your account.
After the verification, the DP will send the user agreements and there they will mention the rules and rights of an investor. Along with that, you will receive the account number and password. Using the account number you can start trading.
Though this article is about “ Can I Trade Without A Broker? ” and we have discussed all about it. Another option to trade in stocks is the DSPP method. But many investors use the Demat account. But after knowing the pros and cons of DSPP we will advise to use the broker Demat account, where the investors get many options and facilities. It will be much to use it.
Can I Trade Without A Broker?
Yes, it is possible to trade without any broker through DSPP. But in order to participate in share market transactions, you need a trading account through SEBI registered brokers.
Can I trade on my own?
Yes, you can trade by yourself. Just open a trading account through a broker/sub-broker and use your savings bank account to add funds and withdraw the market returns.
Why would you need a broker?
A broker is the intermediatory between a trader and the stock exchange. The security exchange only allows its members to buy and sell stocks. And the registered brokers do that on behalf of yours and they charge a brokerage fee for this.
How do I buy stock by myself?
It is easy to buy stocks for your own using a online stock broker. After opening the account you to fund it and place an order on the mobile app or on the website of the broker to buy any stocks with the quantities you want. Then the order will be executed and the stocks will be in your account. This is just a matter of minutes.
How do beginners invest in stocks?
It is now very easy to invest in stocks. Just open a trading brokerage account and add funds to it, then place an order to buy. If you are a beginner then take any professional advisor. Sometimes many online brokers provide the tips and recommendations.
Which app is best for trading in India?
There are so many online broker options for investors. Presently Zerodha is the leading broker in India with 9+ million happy clients.
Here is the top broker list in India.
1. ZERODHA ( KITE ) Trading App
2. ANGEL ONE Trading App
3. UPSTOX Pro Trading App
4. 5 PAISA Trading App
5. MOTILAL OSWAL Trading App
6. ICICI Direct Trading App
7. INDIA Infoline Trading App
8. HDFC Securities Trading App
9. KOTAK Securities Trading App
10. EDLWEISS Broking Trading App