In this article, you will get to know about what a trading account is and how to open a online trading account.
A trading account is an account that holds financial assets like equities and derivatives. It helps, buy shares and sell shares, and other Financial instruments that are listed on the stock market. A trading account will be a link between a Demat account and bank account of the investor. It is also linked with the user bank account. In order to perform a trade, cash in bank account will be used. Demat account stores the stocks bought. A trading account is necessary to buy or sell a security.
Uses of Trading Account
- There are multiple exchanges in India. National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Multiple Commodity Exchange (MCX) are some. With a trading account you can access all exchanges through a common platform.
- In order to open a trading account. You need to register through any online platform. These platforms provide services like analysis reports and company’s annual reports. And this helps data driven decision-making.
- With over 51.5 million trading account users in India. A trading account, is a effective way to make transactions seamlessly, Monitor your portfolio in real time and for smooth transactions.
How to open trading account online?
Before online Trading, The stock market operated based on outcry system. Where traders communicate with each other in a physical place. In India, trading was mainly limited to Dalal street only, where trading used to happen. With online trading system. It has become easier to access stock market trading from anywhere. Let us go through the steps involved in opening a trading account.
- The first step is finding a trading platform. There are lot of trading platforms in India. Some are Zerodha, Motilal Oswal, Upstox and Sharekhan. Each of these are one upon other based on price, reliability, popularity and security. Choose one that goes well with your investment plans. It is important to make sure that the technology they use is strong and healthy. Ask questions about the quality of service they provide. How fast are they at taking complaints? Does their website run without any server problems?. This helps evaluate and find a good trading platform.
- Now, Register yourself in that website. First you will have to register your mail ID. You should have linked your Mobile number with Aadhar for registration. This step involves filling up know your customer (KYC) details. Plus you have to pay for opening account.
- After submitting necessary documents, Brokerage will review and confirm registration.
- You account will be activated in 24 hours. After which you can start trading.
Documents required to open Trading account
- 1.PAN Card which is a identity proof
- 2.Aadhar, Voter ID, Passport for address proof
- 3.Passport Size Photo.
- 4.Income Proof
- 5.Bank Proof (Bank Statement that should be issued within 6 months)
- 6. Scanned copy of the signature online account opening)
Charges for online Trading
Charges slightly differ in each trading platform. We will look at different charges that are involved in trading.
- Brokerage will be charged based on total turn over, It is low in day trading and higher in Delivery trading. Turnover is a addition of cost of total stocks bought and rate at which those stocks are sold. Brokerage could differ based on the competition faced by brokers. For example, Zero charges zero brokerage on Delivery trading.
- Security Transaction Tax: It is a direct tax levied on every purchase and sale of stock market listed securities. The STT rate is decided by government and could change time by time. For, purchase and buying of delivery based equity share, Rate as of now is about 0.1%
- Transaction charges: This is charged by the stock exchanges on buyers and sellers. The rate differs based on which stock exchange it is, and type of share. For instance, Bombay Stock Exchange (BSE) charges 0.0003% on equity trading. And BSE does not charge on derivative trading.
- There are lot of other charges like, Stamp duty, which is paid from buy side. Stamp rate differs based on type of trade. The other charges are SEBI turnover charges, Depository participant charges.