trading account in India

Technologies have transformed everything around us, including the way of investing. In this digital age, the stock market is operated online to facilitate investors with convenient trading. With the advent of demat and trading accounts, stock exchanges have turned to online platforms from the ground. If you want to buy or sell financial securities, you need a trading account. Your Demat account is required to hold your financial securities.

Let us have a look at the preparation or requirements to open a trading account and its working system to know what format it follows to allow you online trading. 

Features of a Trading Account in the Stock Market

To buy or sell securities, you need to open a trading account in India. Following are the features of a trading account that facilitates convenient trading: 

• Access to Multiple Exchanges

A trading platform is linked to multiple stock exchanges, like BSE and NSE. You need to open a single trading account to place a trade on the relevant exchange. 

• A Record of Trading Flow

A trading account records all the trades you place on stock exchanges. You can go through the trades and look at your success rates. You can check why there are those failures in trading. It helps you to know your skills in specific segments and learn more.

• A Bridge Between Demat and Bank Account

A trading account bridges your demat and bank account for a seamless online trading experience.

• When you want to invest in financial securities, you need to place a buy order at the broker’s trading platform using your trading account. Your bank account will be credited with the trade value if it is a buy trade. Your demat account gets credited, and the linked bank account will be debited with the transaction value. 
• The reverse transaction will happen for the sell trade. When you want to sell on the stock exchange, you can locate the securities using your trading account and place a sell order. 

The exchange clearing house clears the trade transaction after the successful match of trade orders, and your demat account gets credited or debited accordingly.

• Faster Trading

A trading account makes the transfer of securities speedy. Before the dematerialisation of securities, investors had to deal with securities in paper format. Stock exchanges followed the “T+5 days” settlement system, which hindered the flow of securities. Online trading has eliminated such hindrances. Recently SEBI has come with a shorter trade settlement duration – T+1 days. It is the choice of the stock exchange to opt for a T+1 days-based settlement process.

• Secured Trading Transactions 

A trading account makes the entire process of share trading secure. Each and every trade placed through a trading account is processed on the stock exchange that is operated under the surveillance of the SEBI (Securities and Exchange Board of India).

• Trade Multiple Securities 

Traders can book profits from multiple securities like derivatives, equities, government securities, etc. They can open a trading account online with a demat account to further buy and sell all these securities and gain significantly. A single account is enough. You can go ahead if you feel the need for multiple trading accounts to trade in different segments. You can open them with different stockbrokers. 

Like demat account annual charges, there are no such charges associated with a trading account. The main charge of a trading account is brokerage.

Preparation of Trading Account – Documents Required

You need to upload the following documents while submitting your online application to open a trading account: 

• PAN card
• Income Proof 
• ID proof 
• Address Proof 
• A cancelled cheque 
• Passport size photo 
• e-Signature with white background

Your stockbroker will verify your documents and provide your trading account number and login details.

If you are looking for stock market experience but do not want to pay more for trading services, you can open a trading account with a stockbroker and start trading in no time.

Read more: How to Become Eligible for a Pre-approved Personal Loan?