What is a Trading Account, and how to open it

Introduction

Digital living has now become a way of life for an increasing number of Indians. The way we communicate, the way we work, the way we spend, and even the way we invest – everything is online. The online element has seeped into financial trading markets too. Gone are when people would purchase and sell shares by out-crying the name of stocks in physical stock markets. Today, we have a Trading Account to do that job for us.  

What is a Trading Account?

An online account that facilitates the trading of shares from stock exchanges is a Trading Account. You can buy and sell stocks through a Trading Account. Earlier, if you wanted to trade at stock markets, you would need to go physically to the stocks markets and communicate with the brokers verbally or through gestures to buy or sell stocks. And then, physical share certificates would be issued to you or taken from you. However, this process is timeworn. Dematerialization took place in 1996, taking care of the several problems of physical share certificates such as loss and damage of documents, delay in certificate transfers, theft, forgery, etc. Since 1996, you can trade using a Trading Account, and the Demat Account electronically stores your shares and securities.

A Trading Account allows you to execute a trade in shares and securities by simply punching in a buy or sale command online. It is a mandatory prerequisite for trading in financial markets, as per SEBI. Each Trading Account is allotted a unique code that serves as its identification tool. Your Trading Account is secured with passcodes. Hence you need not be worried about any misuse or theft from your account. The Trading Account is a link between your Demat Account and your Bank Account. If you buy or sell a share through your Trading Account, there is a corresponding credit or debit of security in your Demat Account. Similarly, the funds get debited or credited accordingly in your Bank Account against the sale or purchase.

Why do you need a Trading Account?

• A Trading Account is a one-stop platform that lets you trade across multiple asset categories such as shares, currencies, bonds, debentures, commodities, gold, ETFs, etc.
• It gives you access to multiple stock exchanges for trading such as NSE, BSE, commodity exchanges, derivative markets, etc.
• The digital feature of the Trading Account gives you the ease of accessing it from anywhere, with the sole requirement being an internet-powered screen such as a mobile phone, a tablet, laptop, etc.

How to Open a Trading Account?

A Trading Account can be opened online easily with a couple of clicks. You don’t need to run pillar to post to get this account active and functional. The entire process can be handled from your comfort zone quickly and straightforwardly. Click here to see it for yourself!

However, before you start your process to open a Trading Account, you should understand the eligibility to open this account.

Eligibility for Opening a Trading Account

Age

You can open a Trading Account if you are a minimum of 18years old.

Demat Account & Bank Account

As mentioned earlier in the article, you need a Demat and Bank Account to start investing and trading with a Trading Account. If you don’t have these two accounts, you can apply for all 3 of the accounts together. It is good to have all three accounts with one registered broker as the fund transfer is instantaneous. More so, you could leverage a scheme and benefit with reduced account handling charges too.

Documentation

A PAN card is a mandatory document needed for opening a Trading Account. As per SEBI regulations, your KYC (Know your Customer) also needs to be updated to run your trading account. Hence, you will need to submit income, address, identity, and bank proofs to fulfill your KYC requirement. Keep your documentation in order well before you apply for the Trading Account so that your account opening process is hassle-free and quick.

Trading Account Opening Process

Once you have complied with the eligibility terms and requirements, the Trading Account Opening process is just a quick and crisp 5-step guide. 

Select your Broker

Only a registered broker can open a Trading Account as per SEBI. Hence, you need to choose the best one for yourself. Reputation, service, and cost are sufficient parameters to pick the best-registered broker. 

Submit the Application

A duly filled account opening form and the KYC documents together make your application for a Trading Account. If you are comfortable with an online system, you can apply online on your service provider’s web portal or mobile application (scanned copies of the KYC documents). If you want to do this the old-school way, you can visit the nearest branch of your broker and apply in person.

Complete the Verification

The successful submission of the application calls for the verification of the applicant. That can again be done online or offline by your broker. The online mode may include OTP / email / SMS / on-call verification. The offline mode generally needs you to visit the branch of the broker for in-person verification.

Sign the Agreement

The broker prepares an agreement that lists down the duties, rights, and roles of the account holder and the broker. You need to go through this thoroughly and then sign it accordingly. Do not hesitate to clarify any doubts that may arise in the agreement with your broker.

Procure your Account Details

This marks the end of your Trading Account opening process. You will receive your complete account details within 3-4 days of your successful verification. You can access your account using your login credentials and your unique Trading Account number that will be sent to you through an email or a postal letter from your broker.

Conclusion

A Trading Account opens several windows of opportunities to grow your wealth. It gives you access to several businesses and services worldwide where you can invest or trade and multiply money in minutes. But, if you are a beginner here, it is a safe bet to swim in shallow waters first before you dive in deep.

Disclaimer – ICICI Securities Ltd. ( I-Sec). The registered office of I-Sec is at ICICI Securities Ltd. – ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025, India, Tel No: 022 – 6807 7100. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purposes and may not be used or considered as an offer document or solicitation of an offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purposes.