How to Open Trading account?

As financial awareness increases, so do the numbers of people who are investing in financial assets such as stocks and bonds. Diversifying your portfolio is also possible by investing in the capital markets. Equity investments have proven to be reliable over the long-term. To invest in equity markets, you will need a trading account, a demat account, and a bank account.

What's a trading account?

You can buy shares when you invest in equity markets. This is in exchange for money. Certified depositories store the shares that investors have purchased. Investors can use these depositories to store stock safely in demat accounts. Investors can sell shares and have them removed from their demat accounts. If the shares are kept in the demat account and the money comes out of the bank account, what role does the trading accounts play? The trading account acts as a common link between the bank account and the investor. Trading accounts facilitate the buying and selling shares. A trading account is required if you wish to trade equity shares. A trading account is not required if you subscribe to a public offer. The shares, if any, will automatically go to your demat account. To sell or purchase other shares, you will still need a trading account.

How do I create a trading account?

You will need to zero in on a broker to open a trading account. Full-service brokers and discount brokers are the two types. In general. This is based on the type of account they offer. No-frills trading accounts are available to those who only want to buy and sell shares. They do not offer any value-added services. Full-service brokers offer financial data, research, and recommendations. After you've decided on the broker type, it is important to assess its market credibility. Although stock market frauds are rare in India, they are not uncommon. In addition to credibility, consider the location of the broker's office as well as the interface of the trading platform. A good factor is the software interface.

Once you have chosen a broker, you will be able to either visit the office and request a form in person or fill out an online form. The representative of the brokerage firm will assist you in the application process and provide information about the documents required. A majority of brokers offer a demat and trading account. A demat account is required to trade options or futures. However, if you wish to trade in equities you will need a trading account.

Documents

To open a trading account, you will need to provide proof of address and proof of identity. A PAN card is required to open a trading account. You can present a passport, voting ID or driving licence as proof of your identity. You can verify the address by providing documents such as a telephone bill, electricity bill, and water bill.

For manual KYC, a photocopy of the PAN card and address proof must be submitted. A few brokers may also conduct a telephonic, or manual verification process. After the acceptance of the documents and application, the broker activates the trading account. There are alternatives if you don't want to send the original documents.

EKYC process

You can choose to opt for the EKYC method via your Aadhar card if you don't want to do manual KYC. E-KYC will require that your Aadhar card is linked to your PAN card and bank account. The mobile number that is linked to the Aadhar Card should match the one submitted in the trading account application. A one-time password is required to verify Aadhar online. A copy of your PAN card and a canceled cheque will be required. You will need to verify your identity by visiting the branch nearest you or video conferencing after you have submitted the documents.

Conclusion

The internet has made it easy to open a trading account and invest in the markets. The trading process has been simplified by brokers, which has resulted in greater participation in capital markets.