What are the Advantages of a Trading Account?

If you want to buy and sell equity shares, ETFs, futures & options, etc, the first thing you need is a trading account. Before getting into trading account benefits, let us first dwell on the concept of trading account. The trading account handles stock market transactions. You need a trading account with a SEBI-registered broker to be able to buy and sell shares and other securities in the market.

Before we look at the advantages of trading account, let us also understand the opening a Trading account and operation process. It is the pivot of your interaction with the capital markets. Let us start with the benefits of trading account

Advantages of a Trading Account?

Here are some of the key advantages of a trading account; your first step to stock market investing.

1. One of the key advantages of a trading account is that it gives you single-point access to all the stock exchanges across the country like the BSE, NSE, MSE, MCX, NCDEX, etc. When you select the stock or commodity to trade, you can select the exchange of choice, and subject to liquidity, the trade is executed in your trading account.

2. One of the big advantages of a trading account is that it is online, which makes your trading account accessible anywhere and anytime. You can access your trading using your PC, laptop, smartphone, PDA, tablet, iPad, etc.

3. One of the big advantages of a trading account is that it allows you to execute transparently. You can see the best price and decide. You don’t rely on the dealer to tell you the price story, it is right in front of you.

4. In a slightly connected point, one of the major benefits of a trading account is its seamless nature. Your trading account, your Demat account, and your bank account are one seamless chain. You don’t see it happen but the seamless link ensures the smooth settlement of trades, receipt of shares in Demat account, and receipt of funds in your bank account.

5. As an investor, the trading account represents your choice of what you expect from trade execution. You can opt for a discount broker for low brokerage but it does not give you much else. Alternatively, you can opt for a full-service brokerage for advice, assistance, research, trading calls, etc, apart from just trade execution.

6. The trading account gives you full control like a DIY model, when online. You can access it via an online interface or through the Mobile Trading App. From that point, you control the price quantity, modifications, etc. This is one of the big advantages of the trading account online interface.

7. Today a combination of artificial intelligence and machine learning allows brokers to personalize research to customers. The trading account today is not just an execution platform but also a platform for you to read relevant research ideas, test strategies, check past performance, and then take an informed call. You can even get additional facilities like personalized support, 24X7 technical support, call n trade facility, etc.

8. Lastly, one interesting benefit of a trading account is also that it enables you to place off-market trades. For example, if you cannot access the trading account on the next trading day, place the order on the previous night. Of course, the execution is done only during trading hours and is subject to price levels. However, you don’t miss out on good trades just due to lack of access.

What is a trading account?

A trading account is your gateway to the capital markets and your investments and is used to buy or sell equity shares, ETFs, derivatives, commodities, etc, through the stock exchange mechanism. Today, the buyers and sellers do not know each other but the trading account allows you to access the stock market anonymous order system through a trading account. Ensure that your broker is SEBI-registered before opening a trading account.

Let us also quickly understand how the trading account functions. It acts as the link between your Demat account for holding shares and your bank account for holding funds. When an investor buys shares, the buy order is placed through the trading account. The transaction goes for processing in the stock exchange and is executed based on the best price logic. On T+1 day, the funds are debited and on T+2 day, the Demat account is credited with shares.

When you sell shares through a trading account, the process is similar as it goes first to the stock exchange order mechanism for execution. Once executed, it gets cleared in the same way through the clearing corporations. On T+1 day, the shares are debited to the Demat account and on T+2 day, the funds are credited to the bank account.

How to Open a Trading Account?

Once you have decided to open a trading account to trade equities and other securities, here is a quick look at the process to open a trading account.

• Once you have decided to open a trading account to trade equities and other securities, here is a quick look at the process to open a trading account.

• Pricing matters, so first compare brokerage rates. You can make a call of a full-service broker versus a discount broker at this stage.

• In case you just want execution, a discount broker is good enough. In case you are also looking at research ideas and trading calls, go for a full-service broker.

• Familiarize yourself with the account opening process. It is simple and you can even do the entire process online using Aadhar authentication.

• Submit your trading account opening form with Demat account form, appropriately and fully read and signed, and also full KYC documents in duplicate with originals for verification. Once approved and accepted, a trading account will be opened.

• In the case of an online trading account, you also need to activate the account with a user name, password, and second-level authentication.

Frequently Asked Questions

How to check my trading account statement?

Check the trading account statement online in your trading interface. Alternatively, you can also ask you broker to email to you or post it to you. Physical posting normally entails extra charges.

Can I put a nominee in my trading account?

In fact, you should provide a nomination in your trading account to avoid operational hassles, in the event of unforeseen circumstances.

Can I access my trading account through my phone?

Of course, you can download the trading app and use a smart phone to trade. If you don’t have a smart phone, you can also access the call n trade facility.