How To Open A Trading Account?

| Updated: January 17, 2023 2:40 pm

A trading or Demat account is similar to a bank account, and it is mainly to store securities that the investors have bought. In this, a trading account needs to hold and buy new securities and works as an interface between the investor and the Demat account. It is not possible to trade in the stock market without a trading account. The request for buying or selling the stocks happens from the stock exchange, and you need to have a Demat account for the same.

Features of a trading account

Trading account is only limited to stocks, as there are accounts for currencies, bonds, commodities, and exchange-trading funds. The benefit is that you can open a trading account online, as the trading accounts have one-point access, unlike any physical trading options.  

If you are planning to open a trading account using any free trading platform, it is easy with online service. You have to share some details and upload the documents, such as identity and address proof. The steps to follow are listed below:

Let us focus on each point, so it becomes easy to open and trade in the stock market using the platform.

1. Selecting a broker or firm

Stock brokers can help open a trading account, and it can be either a discount broker or a traditional broker.

2. Compare the brokerage rate and service to set up the platform

Traditional brokers used to offer trading services along with others like advisory, research reports, and recommendations. The brokers can help with trading accounts and give access to the essential tools to make trade decisions. This is useful when you have to make trade decisions on your own. So, ensure the brokerage charge when you are hiring them for a well-informed trading decision.

3. Get in touch with a broker to open an account

You have to work with a stockbroker online who can help in opening an account and handle online trading easily. Check the services online, and it will be easy to solve the query. If the broker has suitable knowledge, the person can offer prompt service in dealing with your trading account.

4. Fill up the opening and the KYC form

a) It is an important part of opening an online trading account.

b) Get the account opening form and provide the correct details, including name, PAN, email, and others

c) Upload correct KYC details and add proof and other details

d) In-person verification is importantE-sign the document using a registered Aadhaar card and mobile number

5. Application and verification procedure

The online trading application should be filled with a Demat and trading account, and it is to be reviewed by the verification team. Here, you need the assistance of an experienced broker. The details in the application form should match the details on the documents. Any deviation from the same can result in an application rejection problem.

6. Get the trading account details

After you open the account, you will get the login credentials for the trading account. Access the trading account, check the live share price, create the watchlist and buy shares from your favourite companies. But before this, you have to add money to the trading account via the linked bank account.

7. Place the order to sell or buying of the stocks

After the account is opened, it’s time to buy and sell the shares in the market. Here, you will get a power of attorney form from the stockbroker. It is a document that should be signed and sent to the stockbroker. One has to follow the correct power of attorney authorization details to facilitate the selling instructions from the account.

Regardless of the free trading platform you choose, it is important to follow the right steps to make online trading easy to deal with. Ensure each of the documents you offer is suitable to handle buying and selling instructions through the trading account. It takes 3 to 4 days to activate a trading account and complete the verification procedure. Each step is crucial to follow, and ensure you don’t miss any of them.

The Final Part

Before you start to set up a trading account, it’s important to know what kind of trading account you want to access. It will depend on your investment goals. A standard account is to invest in a specific and short-term purpose, and for a long-term process, you have to take suitable plans. It varies from one person and individual to another and also depends on one’s income.

A trader should do a suitable, cost-effective analysis for a hassle-free trading option. If you are working with a brokerage firm, it is better to go through its schedule and understand its trading pattern. It will give you better insight into how to deal with trading in the market and plan strategically.  

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