While some of your friends have made a huge amount of money through investments in the stock market, are you still not sure where to start from? Don’t fret, we got you covered! This article explains everything you need to know about starting and managing a trading account online.
What is a trading account?
Indian stock markets shifted from physical to electronic mode in 1996. Since then having a trading account is a prerequisite for trading. A trading account is a platform that allows investors to buy and sell stocks and manage other financial instruments. The process of making transactions requires the trader to place an order on their trading account, which is forwarded by the host brokerage firm to the Stock exchange.
Steps to open a Trading account:
Choosing a firm: There are various brokerage firms online which offer trading account services. It is very important to familiarise oneself with the features, brokerage rates, and rules of the firm before making the final choice.
Opening an account: Every brokerage firm has a different procedure for opening an account on its platform. Generally, it involves filling up certain forms, submitting identity proofs, proof of residence, and income.
Completing KYC: The next step is completing KYC verification. For physical KYC, a firm employee might visit your residence to validate the registration. One may also opt for e-KYC for which e-KYC documents have to be submitted. PAN, Aadhaar, and bank account have to be linked for this alternative. This is not a tedious step as mostly the registration is assisted by a representative from the brokerage firm.
Activation: After completing the process successfully the firm may take a few days to complete the verification process. Once finished, the trading account’s details are conveyed by the firm and one may start making trades in the stock market.
A trading account essentially works in tandem with a bank account and a demat account in most cases. There are many portfolio management services available online which can be adopted for risk and flexible management. These services provide a portfolio manager who aids his/her client’s investment objectives. Nonetheless, most small account traders continue to choose to build and manage their portfolios themselves.
Opening a trading account is the first step towards trading and investment. Investors should choose the brokerage firm with which they want to open an account only after careful consideration. It is advisable to understand the firm’s fees and commission criteria and read all terms and conditions carefully before coming to a final decision.