Derivatives like options and futures in the share market are becoming popular trading instruments in the stock market. At the same time, today investing in the stock market has become very convenient, thanks to online trading stock platforms and apps. However, there are several demat apps for android and iOS, so you may have a tough time selecting one as a beginner.
Demat Accounts & Trading Platforms
Before we can help choose the best trading platform for futures and options (F&O) trading, it is in your best interests to understand what Demat Accounts and trading platforms are. Your Demat account holds all the shares that you purchase in electronic format. It can be thought of as a savings account, but it is for shares. You can purchase shares on the open market and they are credited to your Demat accounts.
To make transactions, you will also need a trading account. The accounts do not need to be opened separately. When you open a Demat account, you will be able to open a trading account. Your trading account gives you access to the trading platform that can be used to place orders, track positions, and manage risk. It can also provide real-time market data, charts, and other analytical tools. Many trading platforms are available online and can be accessed via a computer or mobile device.
Demat accounts are provided by stockbrokers, so you can visit the website of a recognised stockbroker and get yourself these accounts by completing some basic formalities.
Selecting the Trading Platform for F&O trading
These are the key factors to consider before you choose the best Demat account for F&O Trading.
Demat account opening is free: Many brokers offer demat account opening for no cost. You will be able to save money and make more profit by opening a demat account that has zero fees. To keep the loop running smoothly, however, every demat app will have a fee.
Brokerage fees are low and there are no additional fees: This is one of the most important aspects of F&O trading platforms. When brokerage fees are lower, the individual’s profit increases.
Annual Account Maintenance Fees (AMC): This is one of the most important points to be aware of. Although a Demat account can’t be opened without paying a fee, different providers may charge different amounts to maintain it. The account’s initial year has no AMC. However, all subsequent years have AMC until the account is used. After the second year, some stockbrokers begin charging significant AMC.
Stable Platform: To facilitate trading, the trading platform must be stable. F&O trading is largely dependent on the platform that the client uses to trade. If the software fails, a profitable position could quickly turn into a loss.
Feature Rich: Your platform should include price charts and technical indicators that will help you plan and analyse your trades. Besides that your broker should provide you with trading tips and ideas to assist you with trading in the F&O segment.
Our pick would be The Kotak Securities trading platform as it meets the conditions mentioned above and has all the core features and plenty of additional features like the TradeSmart feature that make a great trading platform. So, you can consider downloading the Kotak Securities demat app for android or iOS to start trading.
Now that you know what you need to look out for to find a great platform for F&O trading, let’s look at F&O trading itself. F&O trading is the purchase and sale of future delivery contracts of financial instruments or commodities. Futures contracts allow you to purchase or sell assets at a certain price at a future date. Options contracts give the buyer the option, but not the obligation to, to buy or sell an asset at a particular price at a future date. F&O trading can be done on commodity or stock exchanges and serves a variety purposes, including hedging against price fluctuations as well as speculation.
However, trading derivatives like options or futures in the share market is a very risky venture. Risk in the F&O market includes credit risk, market risk, liquidity risk, volatility risk, legal and regulatory risk, and operational risk. So as a trader, in order to carefully consider and manage these risks, it is essential that you understand these asset classes thoroughly. At the same time, even though F&O trading sounds interesting, avoid trading F&O as soon as you open your demat account if you don’ understand the risks fully.