India has been shifting to a cashless society. It is quicker, safer, and more economical. The capital markets are where the digital revolution in finance first began.
With the passage of the Depositories Act of 1996, the stock markets began to dematerialize, and the transition to electronic trading began in 1996.
Since the emergence of electronic trading, placing a deal only requires a simple web command. To access the capital markets, a Demat account, trading account, and bank account are requirements for electronic trading.
By deciding which type of account you want and comparing various online stock brokers, you might find a good platform for your trading account.
What is a Trading Account?
To hold securities, cash, and other assets, a trader can use a trading account, which is simply an investment account.
A trading account is necessary to hold existing stocks and purchase new ones. It functions as an interface between the investor and the Demat account.
Simply make the order using your trading account, and the stock exchanges will receive your request to purchase or sell. When everything is finished, the securities are deposited in the Demat account, and the necessary sum is taken out of the bank account.
Advantages of a Trading Account
There are trading accounts for currencies, commodities, bonds, gold, and exchange-traded funds in addition to stocks. The major advantage is that you can open trading account online without going to a bank or the broker’s office, trading accounts offer one-point access.
You can access through a single trading account, stock exchanges like BSE and NSE. You can trade through a variety of platforms, including mobile, and desktop, by opening trading accounts online.
To open a Trading Account, follow these simple steps:
- Determine the type of Demat trading account you’ll require: What are the objectives of your long-term investment? If you only want to invest for one very specific, short-term goal and don’t want your money locked up until you retire, a normal brokerage account is a way to go. If you utilise these accounts, you could have to pay tax on dividends and investment income, but you are free to withdraw your money whenever you like.
- Choose a Depository Participant: Numerous trading opportunities become available after opening an online trading account.
Steps to Open a Trading Account
The first step is to carefully study stock broker companies before selecting one with which to open a trading account. Before choosing a brokerage, consider the various fees assessed by them, the trading platform’s user interface, and the value-added services.
- Check about the facilities and offerings
For novice investors, finding the cheapest deal is the greatest choice, of course, if all other criteria are equal, but there are several other things to take into account as well.
- Submit your trading account opening form and fulfil KYC details
After deciding on a broker, find out how to open a trading account. You must complete a KYC (Know Your Customer) document and account opening paperwork before the broker will open your account.
Additionally, you must provide documentation of your identity, place of residence, and income statement.
Along with several other documents, a photocopy of an Aadhaar card or passport can be used as proof of domicile, and a copy of a PAN card or an Aadhar card can be used as proof of identification.
To open a trading account, a PAN card is required.
- Go through the verification process
After receiving the documents, the broker will manually verify the KYC of the applicant. To verify the documents, a representative may come to your home, or it might be done online. You can choose the electronic KYC procedure if you don’t want to manually verify the documents. Your PAN card needs to be linked to both, your bank account and Aadhaar card for the e-KYC procedure.
- Sign the agreement copy
You will need to sign further paperwork and provide the broker with information about your net worth, employment position, investable assets, and investment goals if you want to request margin privileges or the ability to trade options.
After the verification process is complete and documents are submitted with signature, the trading account is activated in 2 – 4 days.
- Get your trading account number
You will get your Trading account number through which you can start your trades in the share market.
The stock market is becoming more accessible and convenient, but before beginning to trade stocks, it’s vital to understand the fundamentals of Demat and trading accounts.
Nearly all of the major bargain brokers offer commission-free trading. If you engage in a certain action, such as switching a sizable investment account from another broker, they might additionally provide you with a discount.
But because some online brokerage firms have their costs if you want to trade anything other than stocks, it’s crucial to read over each company’s entire price schedule. You will receive help with the procedure from a broker company representative.
To store the securities, a Demat account is required. Hence, the majority of brokerages provide a Demat-cum-trading account.
You can select the appropriate account and successfully enable it if you follow the above instructions. Choosing the appropriate account for your usage and requirements will enable you to engage in ethical trading.