What Is the Procedure to Open a Trading Account?
The share market has shares of companies listed on it that investors can buy and sell. A Trading account is an edge that helps you place buy and sell orders in the share market. You cannot take part in stock nor indices trading without a trading account.
So, What Is The Purpose Of A Trading Account?
To purchase or sell stocks on the stock market, a trading account is a must. Your trading account connects your bank account and your Demat account. Your shares are held in an electronic format in a Demat account.
For example, when you buy a stock, money from your bank account is sent to your trading account so that you can purchase stock. Your Demat account is credited with the shares you receive.
Procedure for Opening a Trading Account
Here are the steps to be followed to open an account:
- Select The Stock Broker Or Dp: Make sure the broker is trustworthy and will execute your orders promptly. Remember that in the stock market, timing is everything. The market price of a stock can vary in seconds. As a result, make sure you choose a reliable broker.
- Submit Account Opening Form: Get in touch with the broker and inquire about the process of opening a trading account. The broker will help you complete the account opening form as well as a KYC (Know Your Customer) form.
- Compare Brokerage Rates: For processing your orders, every broker costs you a brokerage fee. Some may charge more, while others may charge less.
- Documents Submission: Along with the forms, you will need to provide proof of identity, residency, and, in some situations, proof of income. As proof of residence, a photocopy of the Aadhar card or passport will do. A copy of an Aadhar card or a PAN card can also be used as proof of identity. To open a trading account, you must have a PAN card.
- Verification Process: The brokerage will undertake a manual Know Your Customer verification after receiving the documents. You may be requested to check the documents over the phone or a representative may come to your home to do so.
NOTE: You can use the e-KYC method if you don’t want to manually check the documents. You must link your PAN card to your Aadhar card and bank account to complete the e-KYC process. For the e-KYC process, the mobile number entered in the account opening form must match the Aadhar card.
- Get Your Trading Account Credentials: You will be provided your trading account credentials once your application has been processed. Congratulations, you are now able to trade in the stock market. After the verification process is completed, the trading account is usually activated in 3-4 days.
Many brokers allow you to open both a Demat and a trading account with them. You can look over their services and see which ones are right for you.
You can open a trading account using the traditional approach, which entails sending a physical form along with additional papers.
If your Aadhaar card is linked to your phone number, you can take advantage of the paperless account opening process, which is also applicable to trading accounts.