Prior to online trading, stockbrokers had the responsibility to buy and sell orders on their client’s behalf. Thanks to online trading services, investors may now buy and sell orders at their own will, either online or by placing a phone call. The client's instructions automatically get directed to the exchange through the individual’s stockbroker.
In order to buy and sell stocks, it is mandatory to open a demat account and trading account. What is trading account? A trading account is provided by a stockbroker, and it allows a user to buy or sell securities. The trading account is linked to the bank account that provides the necessary liquid cash to buy/sell securities.
Investors are allowed to have multiple accounts, based on their trading strategies. Multiple accounts may include a margin account, an account for retirement savings, a buy-and-hold account for long-term stocks, and a day trading account amongst others.
What is a Trading Account?
- A trading account is an interface that allows buying and selling of shares.
- It acts as an interface between the investors’ bank and Demat accounts.
- Shares purchased through this account are credited to one’s Demat account.
- Sold shares are debited from the Demat account and sales proceeds are credited to the bank account.
- There is no restriction on the number of Demat accounts that an individual can avail.
Here are few things to know about trading account:
- Features and Benefits of Trading Account.
- Benefits of Trading account
- Selecting the Best Trading account in India
- Procedures to Open a Trading Account online
- Documents required
- Getting started
Features and Benefits of Trading Account
- Buy or sell shares either on the phone or online
- Expert recommendations allow investors to access the best performers in various categories.
- Regular market updates and free news alerts on successfully opening an online trading account.
- Using the margin investing option, investors can increase their exposure on various shares.
- A high-speed trading platform allows trading in the stock markets in real time without any delays to maximize profits.
- Orders can be placed during after-market hours using special facilities.
- Expert research advice can be availed from an experienced team of analysts.
A trading account allows an investor to set his own personal trading limits. Investors are allowed to buy/sell stocks, gold ETF, Forex, ETFs, and Derivatives using a trading account. A few benefits of trading accounts are given below.
- It is easy to set up and offers telephonic and online access. An investor does not need to carry physical transactions in order to buy/sell securities.
- It shows the relation between gross profit and sale. This helps to measure an investor’s profitability position.
- It also reflects the ratio between costs of goods sold and gross profits.
Selecting the Best Trading account in India
- Based on the transaction frequency, a reliable platform that provides cost efficient and affordable service charges should be considered.
- A service provider that offers a complete and comprehensive solution to meet various needs for trading on the equity markets should be chosen.
- Consider long-term requirements beforehand, because most transactions, such as transfer from one Demat account, are chargeable.
- The best trading account in India will provide advanced technology platforms to provide access anytime, anywhere. Moreover, there will be almost no downtime, which could restrict trading capabilities.
- Working with a service provider that offers reliable and efficient services is crucial to ensure that one can trade without any trouble. In addition, the customer servicing executives of the chosen service provider must be trained and able to provide quick and effective solutions to any issues that may crop up.
Procedures to Open a Trading Account online
- The first step involved in opening a trading account is selecting a SEBI-registered stockbroker. A broker with a valid registration number that is issued by SEBI is necessary to open a Demat accounts. Angel One offers Demat and Trading account to eager traders, to know more about how to open trading account with Angel One, Click here.
- In order to open a trading account, an individual has to submit a ‘Client Registration Form’ and other documents as prescribed by SEBI - the regulator for the securities market in India. An Account Opening form and Know Your Client (KYC) documents must be submitted along with the investor’s identity and address proofs.
- The details will then be verified through a phone call or an in-house visit.
- After verification, the account will be processed and the investor will receive his account details.
The basic documents required for opening a trading account are:
- Account Opening form.
- Photo ID proof: PAN card / Voter's ID / Passport / Driving license / Aadhaar card.
- Address proof: Telephone bill / Electricity bill / Bank statement / Ration card/ Passport / Voter's ID / Registered lease or sale agreement / Driving license.
Once an investor has opened an online trading account, he may place buy/sell orders at his own convenience, over the phone or online. Investors may find their trading details online, thus making a more informed decision for profitable trading.