1. To trade securities, one must open a security trading account with a securities broker and a demat account with a securities depository. Buying security involves putting up all the money upfront. With the purchase of shares of a company, the holder becomes a part owner of the company. The shareholder typically receives the rights and privileges associated with the security, which may include the receipt of dividends, invitation to the annual shareholders meeting and the power to vote.
2. Selling securities involves buying the security before selling it. Even in cases where short selling is permitted, it is assumed that the securities broker owns the security and then ―lends‖ it to the trader so that he can sell it.
