How to invest in stocks: A Beginners Guide to Buy Stocks Online

Investing in stocks is one of the most popular ways to grow your wealth and secure your financial future. With the rise of online trading platforms, buying and selling stocks has become more accessible than ever before. However, many beginners still find the process confusing and overwhelming.

Step-by-Step Guide to Buy Stocks Online

Start by educating yourself

Becoming a successful stock market investor starts with education. Learn the basics of investing, types of stocks, factors affecting stock prices, risk management and diversification strategies. Read books, articles, and attend workshops to gain knowledge. Observe the market and track stock performance to identify patterns and trends. Education is ongoing, so continuously seek knowledge and stay up-to-date on market developments.

Find a stockbroker

To start trading in the stock market, you’ll need to find an online stockbroker who can help you open a demat and trading account. The demat account holds the shares you purchase, while the trading account lets you place buy or sell stocks on the stock markets.

When choosing a stockbroker, consider their account opening charges and annual maintenance fees (AMC) for the demat account. Different brokers have varying fees, so it’s important to research and compare your options.

It’s also important to look at the brokerage charges, which are fees that the broker charges whenever you place an order in the market. These charges may be based on the trading volume or a flat fee per trade. Some brokers charge a percentage-based brokerage fee proportional to the trade volume, leading to higher costs if you trade frequently.

Tip: Choosing a broker with a flat fee per order can help you save on brokerage costs.

Open a demat and trading account

To begin online trading, one must open a demat account and trading account with a brokerage platform that is is authorized by SEBI (Securities and Exchange Board of India). Once the Demat account is opened, funds can be added through online banking. A good share trading platform should allow for the viewing of stock prices, historical data, charts, and buying and selling of shares in India.

The form-filling process is easy, and you can complete it in less than 15 minutes.
Visit the shortlisted broker website and click on the link to open a Demat account.

  • Enter your basic details, such as name, email id, PAN Card No (permanent account number)., DOB, etc. .
  • Provide your address and bank account details.
  • Upload documents related to your proof of identity and proof of address.
  • Perform a self-verification by recording a short video of yourself with the instructions mentioned and submit it.
  • E-sign your form through the OTP sent on your Aadhar linked mobile number.
  • Submit the application, and you will receive a confirmation regarding your account opening and login credentials in a short duration.

Setting a budget is key before you begin trading

Set a budget for your stock market investment

It is important to set a budget for your stock market investment. This will help you to manage your risk and ensure that you do not over-extend yourself. When setting your budget, consider your financial goals, income, and risk tolerance.

For new investors in the Indian financial market, two common questions arise at this stage:

How much money is required to invest in stocks? The cost of buying stocks of individual companies varies depending on the price of the shares on the stock exchange. Shares can range from a few rupees to a few thousand rupees.

What is the recommended amount to invest in stocks? If you are considering investing in a mutual fund and have a limited budget, Exchange-Traded Funds (ETF) may be a better option. Mutual funds usually have a minimum investment requirement of Rs. 1000 or more, whereas ETFs are traded like stocks and can be purchased at a share price that may or may not be less than Rs. 100.

For those who prefer to invest through funds, most financial advisors suggest allocating a significant portion of your portfolio towards stock funds, particularly if you have a long-term investment horizon.

When it comes to buying and selling shares in a particular company, it is generally recommended to keep them to a small portion of your investment portfolio unless you’re trading professionally.

Note: You will need to acquire a Unique Identification Number or UID if your transaction values exceed Rs. 1 lakh. SEBI mandates this for all market participants, including investors.

Determine your investment strategy

To achieve your financial goals and maximize returns from stock market investments, it’s important to determine your investment strategy. Start by setting clear investment goals, assessing your risk tolerance, considering your time horizon, and regularly reviewing and adjusting your strategy to align with changing goals and market conditions. A well-defined investment strategy can help you make informed decisions, minimize risk, and maximize returns when you buy stocks online.

Access Your Demat and Trading account, Add money and Choose stocks to invest in

Once you have received your login and password for your demat account and trading account from your stockbroker, you can access your account and start exploring the trading platform to buy stocks online. Most brokers offer mobile trading apps for a convenient trading experience.

To begin investing, you need to deposit money from your bank account into your trading account.

Once done, you are ready to buy shares online in India.

You can view live market prices for shares and access in-depth information such as historical prices, charts, and more. To make informed investment decisions, you need to consider various factors such as the financial health of the company, its growth prospects, past performance and its competitive position in the market.

Look at their financial statements, including their balance sheets, income statements, and cash flow statements, to assess their financial health. Analyze their growth prospects by reviewing their revenue, earnings, and market share trends, and assess their competitiveness by looking at their industry position, product offerings, and customer base.

After conducting your analysis, you can then start buying shares and embark on your investment journey.

>> Want to learn about choosing the right stock? Here are 6 key ratios to analyze before investing

Monitor your portfolio

Monitoring your stock portfolio is an essential part of successful investing. Regularly reviewing your portfolio can help you stay on track with your investment goals, assess the performance of your investments, and make necessary adjustments to your portfolio.

There are several key questions you should be asking yourself:

  • Is my portfolio aligned with my investment goals and risk tolerance?
  • Have my investment goals changed, and does my portfolio still align with these goals?
  • Are my investments performing as expected?
  • Are my investments diversified enough to reduce overall risk?
  • Have any significant changes occurred in the financial health of the companies I have invested in?

If your portfolio is not aligned with your investment goals or is too heavily weighted in a particular stock or sector, consider making adjustments to reallocate your investments.

Stay informed and up-to-date with the latest market developments and company details. Regularly monitoring your investments and making adjustments as needed can help you maximize your returns and minimize risk in the stock market.


Investing in stocks can be a great way to grow your wealth and secure your financial future. By following these steps and investing in stocks best suited for you, you can make informed decisions and start building your portfolio today. Remember to educate yourself, set a budget, determine your investment strategy, choose stocks to invest in, and regularly monitor your portfolio.

Frequently Asked Questions

Is online trading safe?

Yes, online trading is secure due to advanced security measures and authentication systems. Most brokerage firms now use the T-PIN-based authentication mechanism provided by CDSL.

Is stock trading suitable for new investors?

Stock trading has become easier for beginners with the advancement of technology. However, it is important to understand the risks and rewards involved before starting to invest.

Is investing in stocks a good choice for beginners?

Investing in stocks is an attractive option for beginners as it is simple to start in the online world, even with as little as Rs. 100. The stock market provides beginners with the opportunity to learn while investing with a low amount of capital. With the current inflation, traditional investment options like fixed deposits have had lower returns compared to the stock market.

How to trade online?

To trade online, first, identify registered online broker with either CSDL– Central Securities Depositories Limited or NSDL– National Securities Depository Limited. Then, open a demat and trading account with your stockbroker. Add money to your trading account from your linked bank account, and view stock details to make informed trades.
Note: You can also choose to make recurring deposits into your brokerage account to increase your portfolio on a regular basis.

Can I invest small amounts in stocks?

Yes, the flexibility of the stock market allows for investment in any amount, even as low as Rs. 100. The minimum amount required to start trading stocks in India is as low as Rs. 100, as shares can range from less than Rs. 10 to over Rs. 50,000. The cost of the shares and associated brokerage fees must be met.

What are the benefits of online trading?

Online trading has many benefits, including security, accessibility, reduced risk of losses and theft, and the ability to trade securities across geographical boundaries. With online trading, you can experiment with various securities and strategies, including the use of bots.

Do I need experience to start online trading?

No experience is required to start online trading in India. You can learn as you go through the process of opening a demat and trading accounts, with demo videos and guidance available.

Can I buy shares on my own?

Online brokers typically allow you to execute trades, or buy and sell stock on the stock exchange. However, some public companies offer direct stock purchase plans (DSPP), in which the shares are purchased directly by customers. Instead of employing the services of brokers, transfer agents manage transactions.



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