What is a Trading Account, Its Charges and Eligibility Criteria

Recently, many people have moved toward investing. People are opening Demat and trading accounts every day. You might have noticed that your neighbour has begun to talk about stocks with you regularly.

Also, you may have decided to start dealing in stocks to make more money. However, before you take a plunge into the world of trading, you need to know about the ABCs of trading.

A trading account is a fundamental aspect of share markets. Understanding them is crucial. So, read this article to learn all the vital information about trading accounts.

What is a trading account?

Are you considering investing in the stock market? As an initial step in becoming a trader, you will need a Demat account. The next step is opening a trading account.

A trading account allows you to buy and sell equity shares and bonds. Using a trading account, you can trade shares and securities in the stock market electronically.

In what way does a trading account work?

Your trading account links your Demat account and your bank account. It debits your shares from your Demat account and credits the money to your bank account. This mechanism for online trading accounts facilitates the sale of your shares. Alternatively, in the case of share purchases, shares are credited to your depository account and the money gets debited from your bank account.

Features of a trading account

Shares can be purchased and sold online or via smartphone.

Expert recommendations facilitate access to the best-performing shares in different categories.

If you open an online trading account, you will get free alerts about the market and news.

Margin investing allows investors to gain exposure to a variety of stocks.

You can trade stocks without any delays with real-time transactions.

Unique features help you place orders after the market hour.

Expert research advice is available from our team of analysts.

Trading account benefits

As an investor, you can set your trading limits on your trading account.

A trading account lets you buy and sell stocks, gold ETFs, forex, and derivatives.

It is easy to perform all sorts of transactions virtually. You do not need physical transactions to buy or sell securities.

It builds a profitable relationship between profits and sales to an investor. 

It provides the perfect ratio between profits and purchased goods.

Demat account vs. trading account

Functional difference: You can use a Demat account to hold securities in an electronic format. A trading account’s purpose is to allow the trading of stocks on the stock market. It means buying and selling shares on the exchange.

Nature: A Demat account works similarly to a savings account. In the same way that a savings account holds money, a Demat account allows investors to have financial instruments in a dematerialized or electronic format. They are debited or credited as necessary. Trading accounts, on the other hand, function more like bank accounts. It is essential to have both a depository account and a trading account.

The main purpose of a Demat account is to keep your trading account safe so you can buy and sell shares at any time without risk.

Time measurement 

Trading accounts differ from depository accounts. Depository accounts hold shares and are measured as stocks at the end of each financial year. On the other hand, an account for trading transactions is a flow statement.

Choosing the best trading account in India

Several service providers are available on the market. So choosing the right one can be confusing. Before selecting your broker, you should consider the following:

Searching for a platform with reasonable service charges based on transaction frequency is essential.

If you are an equity trader, you can select a provider that suits your needs.

The best trading accounts have high-tech platforms that let you trade whenever and wherever you want.

To ensure smooth trading, select a reliable and efficient service provider.

Charges for Opening an Online Trading Account

In India, several stockbrokers provide trading accounts to their clients. In most cases, the expenses associated with a trading account are nominal. You can break the typical fee structure into several categories, such as:

A one-time account-opening fee is required.

Fees for account processing

Annual maintenance fee.

A trading account can be opened in various ways, depending on your chosen plan and associated account opening charges. The average account opening fee ranges from INR 0 to INR 975.00, depending on your plan type.

Eligibility Criteria to Open an Online Trading Account

To open an online trading account, you need to meet specific eligibility criteria, which makes the process straightforward.

Age

You must be 18 years of age. There is still the possibility of having a trading account if you are under 18, but you can’t buy or sell directly with a stockbroker. Besides, you can only sell securities that the minor can possess, such as IPOs, inheritances, gifts, corporate actions, etc.

PAN card

You must have a valid PAN card to apply.

Demat and bank account

You must have a functional depository and bank account. The unavailability of a Demat account can be sorted out by submitting either one of these documents: a cancelled check, a bank passbook, or the most recent 6-month bank statement.

KYC documents

You need to complete KYC for a trading account. Submitting the below documents will help you complete your KYC process: 

Income proof:

If you wish to trade futures and options, you will need income proof. Providing either of these documents can prove your income: the latest six-month bank statement, the most recent three-month salary slip, and the most recent ITR statement.

Identity and address proof:

You can present several types of documentary proof: a PAN card, an Aadhaar card, a driving license, a passport, and a voter ID card. Alternatively, you can submit your most recent utility bill or bank statement for proof of address. Also, you’ll need your passport photo and signature on white paper.

Conclusion

If you still need to start trading, there is always time for you to start. Piramal Finance can be a one-stop solution for all your financial needs. It is always necessary to look for wealth-creation opportunities to create wealth. Thanks for reading the information we provided regarding trading accounts. We hope that it has helped you and cleared your doubts. Comment if you agree.