Investing in stock markets cannot go seamlessly without the important tool – a trading account. It helps to facilitate the whole procedure of share trading. This article covers the main features of a trading account and describes how to make one.
Before diving into the details of a trading account, it’s important to understand bulls and bears. It’s not a joke; these animals are important market concepts. When the market is bullish, the stock prices are rising. It’s like a bull’s horns, which are pointed to the sky. When the market is bearish, the stock prices are falling. It is compared to the bear’s paw, which faces the ground.
Whether the market is bullish or bearish, you wouldn’t feel any of it without a trading account.
What is a trading account?
You can buy or sell equity shares in a stock market only through a trading account.
It’s different from a demat account, which is used only as a storage of the purchased shares. So the real transactions take place only in a trading account.
Features of a trading account
Here are some benefits of opening a trading account:
- Accessibility. Trading accounts have a huge advantage over physical trading: you can open one online without visiting a bank or a broker’s office. You can use a single trading account to sell and buy shares in various stock exchanges such as BSE and NSE. Also, you have access to commodity exchanges like the Multi-Commodity Exchange and the National Commodity and Derivatives Exchange.
- Diversity. Currencies, commodities, and bonds are also available for trading accounts, in addition to exchange-traded funds.
- FlexibilityYou can adjust your orders on the go and even send floating alerts that notify you via SMS and email.
How to open a trading account?
These are the key steps you should follow to open a trading account.
1. Find a stockbroker
While choosing an online broker, think about your investment objectives. They determine the type of account you need. And different brokers charge different fees.
2. Open a trading account
After you have chosen an appropriate broker, you need to go through an application form. You will be asked basic questions about yourself such as your social security number, date of birth, address, and employment status. Be ready to upload documents that prove your identity and address (the Aadhar card or the PAN card). Note that the PAN card is a must for opening a trading account.
3. Verify your account
After you submit the application form, you will be asked to do a manual or an online KYC verification. In the first case, a representative may check your documents at your house. If you choose the e-KYC process, make sure that your PAN card is linked to the Aadhar card and your bank account. Moreover, your mobile number in the application form should be the same as the one for the Aadhar card. It usually takes 3-4 days to activate a trading account.
What are the next steps?
Congratulations on opening a trading account! It is time to try online trading. You can observe both the historical and current market prices of shares in your account. Make sure to conduct analyses for a better chance of successful investments and trades.