Online trading has become more than a medium for buying and selling different financial instruments. Many have taken trading as a full-time profession and are religious about it. Trading account is the backbone of the online trading process. They offer investors the medium to buy and sell financial instruments such as stocks, bonds, mutual funds, ETFs, options, and futures.
One cannot indulge in financial trading without a trading account. Trading is a vast field, and there’s a lot to learn. Let’s explore what a trading account entails and other aspects of online trading.
What is a Trading Account?
A trading account is a type of investment account that allows people to buy and sell financial instruments, such as stocks, bonds, etc. It is the connecting link between a trader and the financial market. Without a trading account, you cannot execute trades or manage your investment portfolio. Just like we can’t pay or receive money online without a bank account, trading in financial assets is impossible without this account. Trading accounts are provided by brokerage firms, which act as intermediaries between investors and the financial markets.
Different Types of Trading Accounts
If you go to a bank for an account opening, they usually have two options: a current account and a savings account. Similarly, different trading accounts are available, depending on the financial instrument you want to trade. Let’s take a quick look at some of the most common types of trading accounts.
Equity Trading Account
One of the most popular trading accounts in the financial markets is the equity trading account. It refers to a trading account that allows you to trade stocks of listed companies in the stock market. It is also known as a brokerage account. To operate an equity trading account, it needs to be registered with a stockbroker.
Commodity Trading Account
The second on our list is the commodity trading account. It is a trading account that allows you to trade different physical commodities such as gold, silver, crude oil, and agricultural products. Generally, futures contracts for different commodities are traded using this account.
Currency Trading Account
A currency trading account allows you to trade currencies. Using this account, you can invest in or trade the currencies of different countries. It is also known as a forex trading account.
Demat Account
Also known as a “dematerialized” account, a “Demat” account is a type of trading account that holds your securities electronically. It is mandatory to have a Demat account if you want to trade stocks in India.
How to Open a Trading Account?
Digitization in the financial world has made things easier for people. All you need to do is find a reputed financial institution like Religare Broking Limited that offers a trading account facility. Opening a trading account is a simple process. Here are the steps you need to follow to open a trading account:
- Choose a brokerage firm
The first step in opening a trading account requires choosing a brokerage firm that offers these services.
- Fill out the application form
Once you have chosen a brokerage firm, you must fill out an application form to open a trading account. The application form will ask for personal information such as your name, address, and PAN number.
- Submit essential documents
You will also need to submit some documents along with the application form. These documents may include your identity proof, address proof, and PAN card.
- Deposit funds into your account
After your application is approved, you need to transfer funds to your trading account. Then, you can transfer funds via UPI or net banking from your bank account to your trading account.
- Start trading
Once your account gets funded, you can start trading. You can choose the financial instruments you want to trade and execute trades through the brokerage’s trading platform.
Conclusion
A trading account is the backbone of online trading. It’s necessary for anyone who wants to trade different financial assets. There are various types of trading accounts one can choose from. Finding the right brokerage firm is crucial to successful trading. Register with Religare Broking Limited to start trading today!