Nowadays, youth is drawn to the commercial revolution due to the advancement of technology and the rapid growth of Indian stock markets. A Stock Trading account works as a financial platform for your trading purposes and online platforms allow you to do this in a snap. Today it’s very easy open a trading account, with a safe and secure gateway, on the online platforms of brokerage firms. This article would focus on the details of what a trading account is and how it works.
Meaning of a trading account
A direct answer to the question of what is trading account can be explained as – a trading account means a type of investment account that keeps your shares stored in digital/electronic format. You can use it to buy and sell in intraday trading sessions. There are several different types of trading accounts that you can choose from depending on your needs.
How do trading accounts work?
A trading account is used to provide you with a platform to trade and buy or sell stocks using funds. The trading account acts as a link between your bank account and the Demat account for investors. To start trading on the stock market in India, you need to open a Trading Account. You can trade intraday only with your trading account. All transactions involving your shares are handled through your trading account. Using your trading account, you can buy and sell shares of various companies.
- Trading Account Share Purchase Process –
- When you buy a share, the money is transferred from your bank account to your trading account.
- Your broker transfers funds from your trading account to the seller’s trading account.
- Shares are credited to the buyer’s Demat account upon completion of the transaction.
- In T+1 days, the shares are credited to your Demat account.
- This information is easily accessible from the participations tab of your Demat account.
- Process of selling shares from the trading account –
- When you sell shares in a company, the shares are transferred from your Demat account to the buyer’s Demat account.
- Also, the money is transferred from the seller’s trading account to yours.
- After that, you can transfer the funds to your bank deposit account.
Overall, your bank account must be linked to your trading account for stock market trades and shares are transferred to and from your trading account.
How to open a trading account?
Below are the steps to open a trading account –
Select the broker based on your investment needs with an interactive, simple, attractive trading platform with an intuitive interface.
Compare the different plans of each broker and before making a final decision on any broker, their rates should be checked and tested.
When applying for a trading account, you will need to complete and submit an application form and a KYC form with your personal details and required documents.
When data is submitted by applicants for trading accounts, the data is checked to assess any possible fraud.
After meeting the initial documentation requirements, your trading account is ready to trade stocks. Your account details are available on the platform and your trading account is ready for trading.
Through this blog, we have seen what a trading account is and how it works. The trading account controls the trader’s intraday transactions and includes both securities and cash transactions. Having a trading account is a must if you want to trade efficiently and successfully in trading stocks, currency and other assets. Soon, visit your broker’s website and open your trading account immediately!