Trading Account – Find Definition, Account Opening Process, Benefits, Types & more
At present, Trading is done in electronic format. In electronic format, Trading Account is an indispensable part of trading for the stock market traders and investors.
This account is the link between the Demat and the Bank account.
The Trading Account Online is necessary for trading shares at present. In this article, we will discuss all the details of the same.
We will take you through the features and benefits of having an account. Along with that, we will guide you about the procedure of opening and closing it.
The article will have details about different types of trading account. It will describe the difference between having an online and offline trading account.
All in all, this article is going to guide you about everything you want to know about the Trading account.
What is a Trading Account?
A Trading Account is required for buying and selling of stocks in the share market. It is the account that you need to open to trade in the stocks and other asset classes.
The Trading Account Meaning is nothing but an account that is used for buying and selling of shares and commodities, equities and other financial assets.
After the share market adopted the electronic system, the trading account came into the picture. Earlier, trading was done in paper format.
The physical shares were bought and sold by the brokers on behalf of their clients/ investors.
It eases the stock trading processes by eliminating the need for physical presence. Now with an online trading account, you can buy and sell shares from anywhere in the world.
A unique trading ID is provided to each of the trading accounts. You need to open the same with a stockbroker.
They have the setup to carry on the trades initiated by you. You can also ask them to place orders on your behalf. The trading account of an investor links the Demat and the Bank Account.
The shares you buy gets credited to the Demat account of yours. Then the money is deducted from your bank account for the purchase.
The opposite thing happens when you sell the shares. The Demat account gets debited when you sell shares on the trading platform.
The money equivalent to the sale of shares gets credited to the bank account.
Open Trading Account Online – Fill up the form Now!
How to Open Trading Account Online?
For trading, you need to Open Trading Account with a stockbroker. There are hundreds of stockbrokers in the country, from which you have to select one to open your trading account with it.
We will discuss the methods of selecting the best broker in the later section of this article.
To open Trading Account Online you need to –
- Here, fill up the online form by clicking on “Open Trading Account” button. There you will find an application form or pop-up form.
- You have to fill the online form and click on the submit button.
- Once you submit the online form, another page will open.
- On this page, you have to upload the scan copies of your KYC documents. With online account opening, many stockbrokers just require PAN card and AADHAAR card.
- Once the documents are verified, you will receive an email on your registered email id. The email will contain your Client ID and log in and password.
- You can then login to your account and start trading.
To open Trading Account Offline –
You can choose the offline trading account opening as well. You need to visit a branch of the stockbroker that you have selected for the same.
- After visiting the office of the broker, ask for an account opening form.
- Fill the form and submit the photocopy of the required documents.
- After submission, you need to come back home and wait.
- The executives of the brokerage house will visit your home and verify the details in the documents submitted.
- Once the verification is over, they will open your account.
- You will receive the login and password in your mail with the Trading Unique ID.
Documents required to open an Online Trading Account?
The trading account as we saw is mandatory for trading. To open this account, you will need a few documents for verification of your identity.
If any of the documents have a validity period please check before submission of the same. The documents are as follows –
These are the documents that you can submit to verify your income and family income, any one is required –
- A photocopy or scan copy of ITR or Income Tax Return Acknowledgment slip. The one you submit to the IT Department for tax filling.
- Photocopy of certificate of Net worth or annual statement of accounts. Chartered Accountant must have authenticated them.
- Form 16 or the current month’s salary slip.
- Last Six months’ bank statement.
- Self-declaration of assets and documents verifying the same.
To proof your identity you need to submit the following documents, any 1 document is required –
- Passport/ Voter ID/ AADHAAR card/ Driving License
- Pan Card with a proper photograph
- Any identity card which has a photo of the applicant. The identity card must have been issued by the state government/ central government.
- It can be also issued by statutory or regulatory authorities and departments of the government.
- Identity Cards issued by Professional institutions like ICAI, ICSI, and ICWAI.
- It can be Bar council or any financial institution, colleges that are affiliated to UGC.
For verification of the address of the applicant, they need to submit any 1 document is needed –
- Voter ID/ Passport/ Ration Card
- Utility Bills issued on their name like – Electricity bill/ Telephone bill/ gas bill etc.
- You can also submit Insurance copy, Lease Agreement, Driving License which is on your name.
- Bank passbook which is not issued before three months.
- Judges of the High Court and Supreme Court can give self-declaration of their new addresses.
- Any address proof that has been issued by gazetted officers.
- Address proof issued by managers of commercial or co-operative/ multinational/ scheduled banks.
- It also includes address proof issued by MPs, MLAs and notary public.
- Any Identity card having addressed that is mentioned in the above points 2c and 2d.
- Any Address proof which is given on the name of the spouse of the applicant.
List of Best Trading Account Providers in India
How to select the Best Trading Account in India?
Trading accounts offered by the brokerage houses in the country comes with a price tag. There are different fees applicable. There are different services provided by the brokerage houses.
You can follow these guidelines for choosing the best trading account –
- Understand the frequency of your trading. Then check the brokerage charges of the brokerage houses.
- Find the services offered by the brokerage houses with which you want to open your trading account.
- Check whether transfer to Demat account is chargeable or not.
- Check whether fund transfer is free or not.
- You should select a brokerage house that provides timely and efficient services.
- Compare the charges levied on trading by different brokerage houses. You must compare the services offered by them.
- After a thorough comparison, you should choose one of the brokerage houses.
- It must fit your pocket the best and fulfill your trading requirements.
Why open a Trading Account Online?
The Trading Account Benefits are as follows –
Access to Multiple Exchange
There are different stock exchanges in the country. There is National Stock Exchange, Bombay Stock Exchange, MCX for commodity trading and many others.
With Trading Account Online, you can get access to all these exchanges from one single point. You do not have to open multiple accounts to trade on different exchanges.
This helps to bring down your expenses as well in the form of registration fees and others.
Online Account Opening
To Open a Trading Account online you do not have to visit any stock brokerage house office. It can be done easily from your home.
However, you can also go for an offline account opening. But, the online account opening is easy and thus it takes less time.
Ample of Information
Trading Account is the main account where you do all your activities for trading.
This is why, the research analysts of the brokerage firm, upload all the research documents, reports on the trading platforms.
These reports and research documents are accessible using the trading platform when you trade on it.
The research documents enable the trader and investor to get insight information and trade accordingly for making a profit.
On the trading platform, you can set customized alerts and notifications for the trades in your account.
You can set up alerts for price movements of the shares you follow. There are SMS alert facilities, email alert and notification facilities you can use.
Smooth and hassle-free transactions
With the use of a trading account you can achieve the hassle-free transaction. All three accounts required for trading are linked via a trading account.
With one click you can trade, transfer fund and gets the shares in Demat account.
Flexibility of trading
With the advent of technology, you can access your trading account from multiple devices.
Since, there are trading platforms for mobile phones, computers, and laptops, etc. you can access and trade on all these devices.
In online trading, there is no need to meet your broker physically, or be present at their office to trade shares.
You can trade by yourself, sitting in your own home or office. This is the result of online trading which eliminates the need for communication with the broker for trading shares.
As a result of the elimination of the middlemen, the cost of trading also gets reduced. Though there is a brokerage fee for trading, it is considerably lower than the physical trading of shares.
Better Monitoring and control
With the online trading account, you have full control over your trades. Since you do not rely on anyone for your trade, there are fewer chances of losing money.
With multiple trading platforms, you can keep an eye on your portfolio performance and act accordingly.
How to use Online Trading Account for Trading?
The purpose of an Online Trading Account is to help investors buy and sell the share. In this section, we will discuss the steps of using the trading platform for trading shares online.
Select a broker and open your account
As you have seen in the above sections, we have discussed the guidelines to select a brokerage house and the steps to open a trading account. So, to use it, you need to open it in the first place.
Learn about stocks
The first thing you need to do to trade is learning about stocks and the market itself.
You must visit the financial websites, read books, and take classes to learn about the trading concepts and strategies to trade.
Online Demo Trading Practice
Trading is rewarding monetarily however, it comes with the risk of losing the money as well. For trading, you need to invest your hard-earned money.
It is advised by the eminent traders and analysts, to practice demo trading before you start trading online. You can use the Stock stimulators online, to practice trading.
This will give you the idea of the market and help you learn about it without risking your hard-earned money.
Planning your investment
In the stock market, everything depends on the right timing and right choices at the right time. This is why planning is an integral part of trading.
Using the trading platform, you can plan your trades well in advance. You can create a schedule for your buy and sell orders and also put stop-losses to secure yourself from the losses.
There are multiple trading strategies you can follow which are on the trading platforms.
Using the trading account, you can invest in a variety of stocks and commodities. As a result, the diversification of your investment becomes easy.
You can reduce the risk of investment by diversifying your investments.
Different Ways to Transfer Funds to your Trading Account?
Trading shares requires money and thus you need funds in your trading platform. There are multiple ways of Trading Account Fund Transfer process and they are –
NEFT / IMPS / RTGS
The most common way of adding funds to your trading account is using any of these services.
IMPS transfer funds immediately to your account, while NEFT takes 2-3 hours for the transfer to be completed.
However, if the transfer is done within the same banking network, then it can be quick and instant.
You have to add the broker’s bank account as the beneficiary. For transferring funds to the trading account, you need to use the password and OTP service.
The NEFT service being available only from 9 am to 6 pm from Monday to Saturday, you cannot use it otherwise.
It is also not available on the Bank holidays and National Holidays. In such cases, you can use the IMPS method for fund transfer.
However, it has certain charges attached. For fund transfer over Rs. 2 lakh, you have to do RTGS. This is similar to NEFT only.
Fund transfer via Payment Gateways
The nationalized and the large banks provide payment gateways. Fund transfer using these payment gateways is very easy and hassle-free.
You can use your net banking facility for transferring funds or your Debit card as well. There are certain charges for each transfer you make.
Apart from that, SEBI doesn’t allow usage of credit cards or charge cards for transferring funds via payment gateways.
Cheque or Demand Drafts
If you are using the offline trading account, then you can use Cheques or Demand Drafts to fund your trading account. You need to make sure you have enough money in your account.
The cheque needs to be duly signed before you submit the same. It takes around 2-3 days to get transferred to your account.
Documents for fund transfer
There are certain documents you need to maintain for transferring funds to your trading account.
Whether you transfer funds through NEFT, IMPS, Payment gateways, always take a snapshot or screenshot of the transfer.
This will help you keep a record and track of your funds. When you transfer funds using the cheques or DD, keep a scanned copy or photocopy of the same.
You can also email the screenshot of the NEFT/IMPS/payment gateway transfer to the broker to check whether it has got credited or not to their respective account.
Types of Trading Account in India
The trading accounts offered by the brokerage houses in the country are of different types. There are –
Equity Trading Account
This is an account that is used to deal in equity stocks without any delivery of stock involved. This means you cannot take delivery of the stocks unless you have a Demat account.
Equity trading account helps in trading of futures and options as well, for which no Demat account is required.
Commodity Trading Account
As the name suggests, the commodity trading account is for trading in the commodity segment.
The regulator for commodities trading is SEBI only, however, the trading practice is carried on different trading accounts.
Commodities are a big part of the trading business and thus having a commodity trading account opens various avenues for the commodity traders.
The trading account which is only linked to the Demat account is known as 2-in-1 Account.
When the bank account is also linked to this 2-in-1 account (in-built, provided by banking institutes-based brokerage houses) is known as 3-in-1 accounts.
Trading account of Full-service broker and Discount Broker
The trading accounts provided by the full service brokerage houses have all kind of services like research and advisory, multiple trading segments, while the trading accounts offered by Discount brokers only provide trading services.
List of more Broking House with decent Trading Accounts
Online Vs. Offline Trading Account
The difference between Online and Offline Trading accounts is an interesting one. Let us see what make these two different from each other apart from their names.
If you go by the name, you might think, that with an offline trading account, the investor or the traders has to go to the broker’s office or at the exchange to trade shares in physical format.
However, that is not that scenario at all. As everything is dematerialised now in the share market.
The different between the two is that in offline account, you do not have the access to the trading platforms.
You cannot trade using the trading platform on desktop or mobile or any other device.
You have to call the representatives of the brokerage house and ask them to trade on your behalf. While in online trading, as you know you can trade using the trading platforms on your own.
There is call& trade charges in offline trading which is not there in online trading.
How to close a Trading Account?
Closure of a Trading account is an important decision. To Close Trading Account, you must think about all the pros and cons.
You must have certain reasons for closing the account like –
- No or less time to invest in trading.
- Not achieving your desired results from trading
- Have one single account for trading equities and derivatives. Thus closing the multiple accounts you had earlier.
In any of the situation, or other, if you want to close an account, you have to –
- Firstly, inform the brokerage house with which you have your account.
- Secondly, you need to also notify the Depository with which you have the Demat account (if any) or joint trading and Demat account.
- Find the form for account closure on the DP branches’ website. You have to duly fill this form and submit.
- It is important to sign the form properly. If there are joint account holders, then you need to get the closure form signed by all the account holders.
- Submit the form in the DP branch near to your place
- Clear out your trading and Demat account before you close them. There should not be any stocks/commodities in these accounts.
- Your Demat account should not have negative balance. This would straightaway reject your application for closing the accounts.
- There is no charges for closing of the account.
- It will take 3-7 business days to completely close the trading account and associated accounts.
Trading Account – Conclusion
Trading Account open up a whole new world of investment for the traders and investors. It is easy to open Trading Account Online with just a few documents.
You can have multiple trading accounts for different asset segments.
There are multiple benefits of having this like you can trade using the trading platforms from anywhere in the world, deal in multiple segments using one single platform and many others.
To close the account you need to sure about it and must clear out all the investment in the linked Demat account before closing.
Trading Account FAQs
Ques – What do you mean by trading account?
Answer – Trading account is an exceedingly significant part of trading for stock market investors. It is the link between the demat account and the bank account. It allows you to trade all your shares in an electronic form.
Ques – How to open trading account online?
Answer – Click on open trading account and fill up the online form
- Click on the submit button which will now open a new page for you.
- Upload copies of your KYC documents on this page which includes PAN card and Aadhaar card.
- Once this step is done and dusted with you will get an email on your registered email ID. That will contain your login and password. You can now login to your account and start the training process.
Ques – What are the documents required for opening trading account?
Answer – Income proof-A photocopy of your income tax returns slip, net worth, current month salary slip and self declaration statement of all your documents that verify the same thing.
- Identity proof-your voter ID or driving license, proper photograph, passport, ration card, bank passbook and any address proof issued by the MLA or MP.
Ques – How to select the best trading account in India?
Answer – There are a few steps you need to keep in mind before selecting the best trading account in India. Some of them are:
- Make sure the demat account fund transfer is free.
- Check if the brokerage house gives on-time services and customer support.
- Compare every charge on every brokerage house and then reach a conclusion as to which one you should choose among all them
Ques – How to select stock broker for opening trading account?
Answer – You need to have a thorough knowledge about stocks
- You could do an online demo trading practice for this.
- Start planning your investment using multiple strategies which you can later use on the trading platform to score a huge profit.
Ques – What are the different types of trading accounts?
Answer – The different types of trading accounts are:
- Equity trading account
- commodity trading account
- Linked account
- Trading account of full service broker and discount broker
Ques – How to close or deactivate trading account?
Answer – This would require you to visit the DP office by any of the demat account holders. The next step is to submit whatever form and documents have been asked for. The account holder will now have to download the application form from the website of the DP.
Ques – Where can I find top stock brokers for creating account?
Answer – On our website, in this very article, we provide you with a list of top stockbrokers for creating an account for yourself. Some of them are: Arihant capital trading, Jhaveri securities trading, Alankit assignments trading, so on and so forth.
Ques – How to link savings accounts to trading account?
Answer – The first type is to enter the bank account number, the name of the bank, its branch, followed by your IFSC code and the MICR Code of the particular bank account.
Ques – How can I open instant Demat account?
Answer – First of all you need to visit the page of which ever stockbroking company want to invest in. Then you have to fill the lead form provided by them to open the demat account. You have to enter the OTP which will be sent to your registered mobile number. The Next step will have to be filling up your birth date, PAN details, email address and your bank account details. Every detail regarding your demat account will be then sent to you on your registered email ID.
Open Trading Account Now! – Get upto 90% discount on Brokerage
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