Trading Account: What is a Trading Account & Its Benefits?

Home - Finance - Trading Account: What is a Trading Account & Its Benefits?

For making investments in the Indian stock market, an investor/trader requires a few accounts to enable trading and store assets and securities. You may have heard of a Demat account and how to open a Demat account. This is essentially an account that holds your securities (stocks, bonds, and other securities) safely in a digital format. Besides having a Demat account to invest in the Indian stock market, you also need a trading account. This is linked to your Demat account to facilitate the seamless transactions of trading on the stock market, the buying and selling of securities like stocks. 

Understand What a Trading Account Is

A trading account is not like a Demat account, in that it does not store your securities once they are bought. A trading account is used for the actual buying and selling of securities on the stock market. This means that a trading account, while being known as an investment account, plays the role of a transaction account. The actual transaction of buying and selling securities is conducted by the trading account. The Securities and Exchange Board of India (SEBI), the chief regulatory body of the financial markets in India, has made it mandatory for all investors trading in the stock markets to own a Demat account and a trading account. Both Demat accounts and trading accounts may be opened online and operated online thereafter. 

How a Trading Account Works

Both a trading account and a Demat account can be opened online with a broker or a bank and these entities must be registered with SEBI. Once these accounts are opened, your bank account is also linked to them. Then you can place orders to buy and sell securities. If you buy securities like stocks, you have to place an order to purchase them and your trading account conducts the purchase transaction by debiting the money needed for the purchase from your bank account. The bought securities are then deposited in your Demat account. On the other hand, if you sell securities, the trading account will conduct the sale transaction by debiting your Demat account and depositing the proceeds of the sale into your bank account. 

The Benefits of a Trading Account

Whether you think you are trading on the best trading platform in India or not, your trading account remains an important part of your investment in securities. A trading account helps you to transact different types of securities like stocks, ETFs, currency, and bonds. A trading account is important for many reasons, and you will find some key features and advantages of a trading account below: 

  • Quick and Easy Transactions

A trading account is an online account that makes your trading transactions very rapid and seamless. There are no technical glitches and you get a hassle-free trading experience.

  • Accessibility Anywhere

As a trading account can be opened online, it is accessible to many people, even those living in remote areas, who would not have otherwise been able to trade. Additionally, trading platforms can be accessed from any digital device like smartphones and apps so trading can be done at any time, letting investors make the most of lucrative opportunities. 

  • Tailor-Made Account

Through a trading account, you can customise the tracking of securities and keep a watchlist handy to make the most of trading opportunities. Furthermore, you can modify orders quickly and set effective alerts through emails and SMS facilities so you can take advantage of updates in real-time. 

  • One Platform, One Account

There are several exchanges in India through which you can trade and invest, some being the Bombay Stock Exchange, the National Stock Exchange, and the Multi-Commodity Exchange. Via your online trading account, you get access to multiple exchanges and can trade in the securities you opt for. 

  • Relevant Information Access

The potentially best trading platform in India should not just let you trade smoothly but also give you access to relevant and unique research insights into trading and securities. Such resources can be important to any investor and can make a trading platform stand out from its competitors. This boosts the opportunities for potential profits that investors look forward to as it results in positive investment decisions. 

Get Ahead in the Trading Game

Being an investor and a trader is not a challenge once you have a reliable and professional trading platform to bank on. Trading platforms give you the advantage of being in the know about various aspects of trading as well as give you a smooth-sailing trading experience.

Table of Contents

Written by sanaya