Day by day, more Indians are turning their heads towards the stock market as it is a lucrative avenue to make money. They want to invest their money, and see it compound over time. Hence, many Indians are showing an inclination toward learning how to get started with investing in the stock market. This article will cover one of the most fundamental tools required to invest in the stock market: a trading account. So, let us understand what a trading account is, and then learn about the trading account opening process.
Trading Account Meaning
A trading account is a pass or ticket that allows you to make transactions in the stock market. Simply put, your trading account allows you to buy and sell stocks and other securities. So, do not make the assumption that you require a trading account only if you wish to perform short-term or intraday trading. A trading account is mandatory for making any transaction in the stock market. It is likely that since you are here on this page, reading this article, you have already made a few google searches regarding investing. In that case, it is likely that you have already stumbled upon a few web ads about stock trading apps. Those trading apps are like the tools you use to access your trading account.
However, do not get confused between a trading account and a demat account. Like the trading account, a demat account is another account every stock market investor must possess. It works in tandem with your demat account to facilitate online share trading. Now, remember, your trading account only allows you to make transactions in the stock market. So, if you buy a few shares, you will need to keep them somewhere safe.Your demat account is in charge of storing shares electronicallyWhen you sell your shares, they get debited from your demat account and transferred to the next investor’s demat account.
Opening a Trading Account
As mentioned in the previous section, you access your trading account using your trading platform or trading app. Now, both the trading app and the trading account are provided by a stockbroker. So, to open a trading account, you approach an authorised stockbroker. Moreover, you open a demat account with a stockbroker registered as a depository participant. So, you open both the accounts with a reputed stockbroker. Furthermore, most leading brokers offer both the accounts as a 2-in-1 package, as both accounts are linked together to facilitate stock market investing.
Before moving on to the trading account opening process, you must understand the significance of researching and doing a background check on the broker. It is essential to research the broker if you want the best services at the best prices, as well as for safety-related purposes. So do check the following before selecting a broker to get hold of a trading account.
- Ensure that your broker is a SEBI (Securities and Exchange Board of India) approved broker, and that will filter out all the dubious brokers.
2.. Check with your broker to see if you can open a trading account.
- Evaluate the broker’s trading platform—a robust trading platform should be easy to navigate and feature-rich.
- Find out what additional benefits you get with your trading account—essential features like price charts, real-time pricing, and stock tracking features.
- Lastly, assess the broker’s fee and compare it with that of other brokers.
You choose the broker that satisfies the first three points, and offers the most useful features for the best price.
Steps to Open a Trading Account
After you have picked a broker, you can head to their website or download their app from your mobile storefront to open a trading account. You can open a trading account by referring to the four steps mentioned below.
Step 1: Register
Whether you are on the broker’s website or on their app, you will see an option to open a demat account. Select that option, as we discussed before brokers offer 2-1 accounts. Then, provide your mobile number and email ID to start the trading account opening process.
Step 2: Verification Stage
After your broker verifies your phone number and email ID, you will then have to provide some other essential personal details. Those details include your PAN card, DOB, residential address, bank details, etc. Provide the required information and complete the KYC verification.
Step 3: Upload Documents
Next, scan and upload a good picture of your Aadhaar card and PAN card to verify the details you provided in the previous step.
Step 4: E-sign and Confirmation
Finally, e-sign using your Aadhaar card and submit the form. Your broker will then authenticate all your details and provide you with your trading account credentials. You are then free to log in to the app, and start trading.
So, this is how you go about opening a trading account to invest in the stock market. The account opening process, as you can see, is fairly straightforward. Research well, and you will get hold of the best broker for investing in the stock market.