What is Trading Account ?
Trading Account is an account through which orders to buy and sell shares are sent on the stock exchange. When We share Market work to withdraw money during the trading is the trading and deposit via bank account. When we sell shares, the shares are transferred from our DEMAT account to the trading account at the time of selling . It is also necessary to have a trading account for investing in Mutual Funds.
What is the Trading Account?
The account prepared by the trader to get information about the profit or loss arising from trading within a specified time is called Trading Account. The trading account is used to transfer money to buy shares in the stock market and place orders to the stockbroker for buying and selling of shares.
This account is linked with our DEMAT account, and with the help of trading account, when we place an order to buy shares in the stock market, and our order is completed, then the purchased shares are credited to our DEMAT account. . And with the value of the shares we buy and with the tax and brokerage charges, money is deducted from our trading account.
Similarly, when we sell shares, the sold shares are deducted from the DEMAT account, and the amount of the sold shares gets deposited in our trading account after deducting brokerage and tax. We cannot place orders to buy and sell any shares or shares directly from the share market, our stock broker transmits orders to buy and sell our shares to the stock market.
So the stock broker opens an account, which is called Trading Account, to access all our buy and sell orders to the stock market.
If you also want to do trading in the stock market, then this question must be coming in your mind that How I can open Trading Account?, So Read Below.
How to open a Trading Account?
To open or create a trading account, you must have a DEMAT account, when you open a DEMAT account, you can also open your trading account from the same. The broker links your trading account with your DEMAT account.
You can approach a Depository Participant (DP) who is a broker or sub-broker of NSDL or CDSL to open a trading account. Today many banks and institutions are working as DPs.
Apart from these banks, there are many private financial institutions across the country who are acting as DPs, whom you can contact to open a trading account and open your trading account.
In order to open a trading account, you will need the following documents mentioned below:
- Account opening form
- Photo ID Proof: PAN Card / Voter ID / Passport / Driving License / Aadhar Card .
- Address Proof: Telephone or Electricity Bill/ Ration Card/ Passport/ Voter ID/ Driving License.
- Bank account number
- Passport size photo
Benefits Of Trading Account
Keeping Shares in Trading Account is very beneficial, because Trading Account gives us many types of facilities like:
- This makes buying and selling of shares very easy.
- It also provides debit and credit card facility to buy shares.
- With the trading account going online, the brokerage charges have become much less than before.
- With a trading account, you can buy and sell shares from anywhere in the world.
- Deducting money on buying shares and depositing in the account on selling are done automatically.
Now you must be thinking the Difference between Trading Account and DEMAT Account so I have covered that section also.
Difference between DEMAT and Trading Account
To trade in share market both DEMAT account and trading account is necessary. However, there is a difference between these two, which you have been told about below:
Trading account is used to place buy or sell orders in the stock market, whereas DEMAT account is used as a store to deposit shares. Means trading account is used for transactions, and DEMAT account is used to keep shares safe.
Let us explain you through an example, suppose when you buy shares using your trading account, the money is withdrawn from your bank account and the shares are deposited in your DEMAT account.
Similarly, when you sell shares, the shares are withdrawn from your DEMAT account and sold in the share market, the amount received from selling the shares is deposited in your bank account.
Conclusion
Once the investor has successfully opened his/her trading and DEMAT account, he/she can place buy/sell orders as per their convenience on their mobile phone or online. With most things going online, investors now get their business details online, which makes it easier for them to make their important decisions on time.
Hopefully, you must have understood the information about Trading Account . If you liked this article, then tell us your suggestions by commenting and if you have any question, then you can also ask us, whose answers you will get soon.