Trading Account

6 mins read
by Angel One
Similar to a bank account, a trading account acts as a common platform to sell or purchase securities. Securities are purchased through a trading account, held by opening a Demat account online, and payments are done through the linked bank account.

Importance of Trading Account

An online trading account helps you trade financial instruments through the internet. You can execute buy/sell orders at the click of a mouse. It is easy to set up, and offers telephonic and online access. It contains a wealth of information about your trading details. Hence, you can make financially sound decisions to increase profitability. Such an account provides information on gross profit and loss. It also increases the speed of the execution and settlement of trade orders. You can also make as many or as few trades as you desire. Moreover, the cost of online trading is lower compared to traditional physical trading.

Types of Trading Account

There are many types of online accounts available for the purpose of trading securities, stock, gold, ETF’s, currencies, etc. These include Online Forex Trading account, Online Commodities Trading account, Online Currency Trading account, Online Equity Trading account and Online Derivatives Trading account. A Forex account is one which holds deposits in one or more currencies for the purpose of speculation of movement in the foreign exchange market. The commodities market is similar to that of a stock market, except that goods are traded instead of stocks. An online equity account allows you to invest in IPOs, equity, mutual funds and currency derivative instruments. Derivative accounts help make profits by betting on the future value of an underlying asset like currencies, stocks, exchange rates, etc.

Features & Benefits

Online trading account offers feasibility to investors as it is simple, stable and fast to deploy. It enables investors to track movements of tradable assets and securities on a real-time basis. You can have multiple accounts based on your trading strategies. Some may have a trading account for buying and selling long-term stocks, retirement savings, margin accounts, etc. It enables you to set your own personal trading limits and buy/sell orders as per your convenience. An online trading account also reflects the ratio between the cost of goods sold and the gross profit. It also gives you a gist of your transactions, gives you real-time quotes, and provides research tools and technical analysis, thus enabling you to make better trading decisions.

The main benefit of an online trading account is the ease with which you can manage your stock portfolios without middlemen/brokers. It also gives you greater control to trust your own intuitions and take risks with your investments. Besides, the speed of transactions increases, as everything can be done instantaneously. In a traditional set-up, one had to contact his stockbroker, who would then negotiate the price with the trader and place the order. This would often result in transaction delays. Online trading eliminates such issues. You can also monitor your stock as and when you wish, analyse research reports, read finance news and trade even when you are on the go.

Things You May Also Like to Know


Why should I open a trading account with Angel One?

Angel One offers the best financial services with respect to trading accounts. The charges for opening a trading account are nil. It also provides expert trading tips so that you can make profitable investment decisions. Angel One offers convenient trading on smartphones and web, through the Angel Swift and Angel Lite apps. You can make transactions on your phone and tablets through Angel Swift. Angel Lite is the mobile browser-based trading tool. Through an Angel One trading account, you can trade various products, including commodity trading, equity trading, derivatives trading, currency and Forex trading, life insurance and mutual funds.

Am I eligible to open a trading account?

Any individual can open a trading account, as long as they have an identity proof and an address proof. These documents are necessary while opening a trading and a demat account. You can provide your voter’s ID, PAN card, driver’s license, passport or bills as identity proof. As proof of address, ration card, driving license, bank passbook, voter’s ID, electricity bill, telephone bill, etc. can be submitted. You should also have a savings account, as it is needed to transfer/receive money when you buy/sell shares through your trading account. It is advisable to open a trading account once you are well versed with the fundamentals of trading.

How can I open an online trading account?

The first step to open an online trading account, is selecting a broker or a firm. Make sure that the broker/firm is registered with the Securities & Exchange Board of India (SEBI). Select the best service provider based on its reputation, service provided, security, brokerage fees and consultancy services. Once you’ve finalized the broker, fill the account opening form, either online, or collect it from the branch. Along with the duly filled form, submit the required KYC documents, such as your identity proof and address proof. Post verification of the application, you will receive your trading account details. You can then make online transactions and manage your stock portfolios, as per your convenience.

How long does it take to open an online trading account?

The time taken to open an online trading account depends on the processing time. Normally, it takes about a week’s time for the verification and processing of the documents.

Sometimes, applicants may face issues during the application; e.g. some may enter a different address in their Account Opening Form and their address proof may have a different address. In such cases, the verification process make take longer than expected, thus causing a delay in the opening of the account. Once, the verification of documents is done, a welcome kit is dispatched to you with your trading details.

How many bank and depository accounts can I link to a trading account?

You can link as many trading accounts as you have, to a demat account, provided that your stockbroker has the Power of Attorney (PoA) for that demat account. It is necessary for the stockbroker to have PoA, as shares can then be pulled from the client’s account. When you purchase shares, you have the option of sending the shares to the same demat account through multiple trading accounts. However, while selling, you can do so with one trading account (the account for which the PoA is mapped with demat).

There are not many advantages of opening multiple trading accounts, except that the brokerage charges are less. Instead, you have to keep track of multiple accounts, access your accounts through multiple platforms, and check multiple P&L statements, which may not be feasible.