What is a Trading Account?

A trading account is essential for investing in Capital markets. Opening a Demat account online is the first step toward trading in the capital markets; opening a trading account is the next step for buying and selling shares in India. An online trading account is mandatory to allow trading in the stock market.

What is a trading account

To hold shares, you have to open your Demat account online. On the other hand, an online trading account allows you to buy or sell shares and securities. Simply put, a Demat account allows you to store your purchase shares, whereas transactions take place in the trading account.

Benefits of an Online Trading Account 

An online trading account simplifies the hassle of buying and selling shares and securities in the Indian Stock market. This also facilitates quick settlement and delivery of shares into Demat.

You can open a trading account through any registered Stockbroker in India. Stockbrokers act as an Intermediary between you (Investor/trader) and the respective stock exchange. When you register, a unique ID is mapped to your trading account, and you are given a password for added security to access it. It not only provides you with the convenience of online accessibility but a few more benefits:

1> You can access multiple Stock Exchanges in one place 

An online trading account allows you to access and trade in multiple stock exchanges at the same time. You can easily trade on major stock exchanges such as National Stock Exchange (NSE), and Bombay Stock Exchange (BSE) on a single platform simultaneously.

2> Insights Via Financial and Research Reports 

Online trading accounts also allow you to access valuable information on stock markets and gather insights. This information can help you to make informed trading decisions and help you fulfill your financial goal more predictably and within your timeline.

3> Convenience

New-age trading platforms often come with a dedicated mobile application to allow access to all of the features even more conveniently.

4> Bespoke Trading Experience

Online trading accounts allow you to customize and personalize your trading experience, customize your watchlist, modify the trade orders on the go, and even set up floating alerts via SMS and Email.

Factors to consider while selecting the Best Trading Account in India

The number of individuals participating in market trades for high returns and profits is increasing by the minute. Trading isn’t entirely risk-free, but there are ways to mitigate it. If you are unsure how to begin trading and what to look for in a trading account and which platform would be good for you amongst the plethora of available options, you should consider the following before selecting an online trading account.

  •     Each Individual has different needs. 

Successful trading will require you to select a broker that would align with your distinctive choices, needs, and profile. Mainly you have to select a broker which helps you achieve your investment goals and can adapt to your learning style and pace.

A trading platform should also be able to assist you with educational material and should also have adequate support staff.

  •     Types of Traders and Trades 

Instead of focusing on the why of trading, you should also focus on the how of trading, which will help you better choose your trading platform. Depending upon how confident you are where you are headed, and you’re aware of what you are heading into, you would want the platform that will execute your trade speedily and easily. Or you could be a trader who wants a diversified portfolio and wants to explore new opportunities; your choice could depend on Stocks, ETFs or Mutual Funds and thus whether the platform offers Margin Trading or not, or if you’ll need conditional order placement, long trading hours or automated trading choices. You need to choose the platform accordingly.

A platform should be chosen based on transaction frequency, reliability, cost efficiency, and affordable service charges. Ideally, the service provider should provide a complete and comprehensive solution to meet the dynamic needs of trading on the equity markets. One should consider long-term requirements beforehand only, as most of the transactions are chargeable such as transfers from one Demat.

The platform should also be technologically equipped to provide access to the platform from anywhere, along with having no downtime so that it does not restrict trading capabilities.

Working with a platform that offers reliable and efficient means is critical to ensure that you can trade without any issues or trouble.

Documents Required for Opening a Trading Account

The process is similar to opening a Demat account, though the process also involves you submitting a few documents as proof of your identification, address, income, and bank account. If your registered mobile number is linked to Aadhaar, you can easily upload the documents on the platform, thus saving you from attesting and taking printouts.

After selecting your brokerage firm, you must fill out a registration form or the KYC form similar to the Demat account opening form. You would need to attach and submit the following documents as proof.

a> Proof of Identity: For submitting proof of identity, any of the following documents can work

  1. PAN Card
  2. Aadhar Card
  3. Passport
  4. Driving license
  5. Any ID card issued by the central or state government.

b> Proof of Permanent and Correspondence Address (POA): If your permanent and correspondence address are the same. You must submit the following documents.

  1. Aadhaar Number
  2. Voter ID card
  3. Ration card
  4. State-issued driving license
  5. Bank account statement or bank passbook
  6. Utility bills. E.g. electricity bill or gas bill
  7. Passport

c> Proof of Income: Trading in the Futures & Options segment requires you to submit your documents to verify your income. You can submit the following documents whichever are available.

  1. Copy of Income Tax Return (ITR)
  2. A copy of annual income audited by CA
  3. Last 6 Months Bank account statement
  4. Your Demat account holding statement 
  5. Copy of Salary slip and Form 16
  6. Net Worth certificate.

d> Proof of Bank account: Your bank account will be needed to be verified to check if it’s in operational condition. One can submit the following documents to verify the same.

  1. A Cancelled Cheque – it has your name and is visible clearly
  2. Bank Passbook with the IFSC code

Since the trading account is mandatory, you will need the same before thinking of buying or selling any of the stocks or other securities. You will need to fill up the registration form with the required documents.  You can choose to open it offline via submitting the documents and form to the broker, or you can register yourself online

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