A trading account is an interface for online trading in the stock exchange. It is an electronic account where the activities of purchase and sale can be traced and is offered by a registered stock market broker.
You can think of the trading account as an execution account linking your bank account and the demat account. A demat account is like a storehouse for all digital securities and the trading account is from where the buying and selling of securities takes place. Your bank account is linked with your trading account. You can transfer funds from your bank account to your trading account and vice versa.
Why do you need a Trading Account?
To get started with the process of share trading, an online trading account is necessary. Various trading accounts are offered by different brokers according to your ease and level of trading. You can choose an online trading account that lets you trade in various products in the stock market. These products can be Equity, Derivatives, Mutual Funds, etc. You can also check whether the online trading account provides you the options of intraday trading, delivery trading, and Margin trade financing.
You should check the brokerage that you need to pay for execution of trades. Every time you place a buy or sell order, and the order gets executed, the stock broker charges a fee called brokerage.
A higher volume of trades means higher brokerage charges, especially if you are using the services of a full-service broker. Here, the brokerage is linked to the trading volume. So, if trading volume is high, the brokerage will rise proportionally.To avoid that, you can choose discount brokers as they offer discounted brokerage charges. Some discount brokers also offer affordable subscription based online trading account which is based on a flat brokerage fee per trade irrespective of your trading volumes.
Features of online Trading account
Here are some noteworthy features and benefits of trading account:
- One account for all trades – A trading account is utilized for trading all types of securities – equities, futures & options, mutual funds, exchange traded funds, and more.
- Easy and quick transactions – Online trading accounts facilitate seamless transaction in stock exchange in a hassle free way. Transactions such as placing buy/sell orders, can be done within seconds just from your mobile phone. It brings the trading at your fingertips.
- Safety– All the transactions taking place through your trading account are secured with digital security protocols.
- Ease of trading– You can access your trading account online from your smartphone, tablet, or PC. Thus, you can perform transactions on the go.
- Technology-driven trading– An online trading account is built on a digital interface, which uses state-of-the-art technology, thus enabling you to trade in the real-time, view detailed analysis of shares, check historical trends and analyse price movements through various formats of charts.
- Control– A trading account gives you complete control over your trading transactions, where you can also view all the past transactions and keep a track of your investments.
- Add-on benefits- With a trading account, you can also get the benefit of trading with margins. In this, your broker finances your purchase and you only pay a part of the buy price. Once the trade is realised, you have to pay an interest on the borrowed amount to your broker.
You can open a trading account online with a stock broker who is registered with any one of the two depositories in India, i.e. NSDL (National Securities Depository Limited) or CDSL (Central Depository Services Limited). Some brokers provide you the option to open free demat and trading account. So take a step today, open your online trading account and start making most of the market opportunities.
Investments in the securities market are subject to market risk, read all the related documents carefully before investing.