Prior to online trading, stockbrokers had the responsibility to buy and sell orders on their client’s behalf. Thanks to online trading services, investors may now buy and sell orders at their own will, either online or by placing a phone call. The client’s instructions automatically get directed to the exchange through the individual’s stockbroker.
In order to buy and sell stocks, it is mandatory to have a trading and a Demat account. What is trading account? A trading account is provided by a stockbroker, and it allows a user to buy or sell securities. The trading account is linked to the bank account that provides the necessary liquid cash to buy/sell securities.
Investors are allowed to have multiple accounts, based on their trading strategies. Multiple accounts may include a margin account, an account for retirement savings, a buy-and-hold account for long-term stocks, and a day trading account amongst others.
What is a Trading Account?
A trading account is an interface that allows buying and selling of shares.
It acts as an interface between the investors’ bank and Demat accounts.
Shares purchased through this account are credited to one’s Demat account.
Sold shares are debited from the Demat account and sales proceeds are credited to the bank account.
There is no restriction on the number of Demat accounts that an individual can avail.
Here are few things to know about trading account:
Features and Benefits of Trading Account
Features:
Buy or sell shares either on the phone or online
Expert recommendations allow investors to access the best performers in various categories.
Regular market updates and free news alerts on successfully opening an online trading account.
Using the margin investing option, investors can increase their exposure on various shares.
A high-speed trading platform allows trading in the stock markets in real time without any delays to maximize profits.
Orders can be placed during after-market hours using special facilities.
Expert research advice can be availed from an experienced team of analysts.
Benefits:
A trading account allows an investor to set his own personal trading limits. Investors are allowed to buy/sell stocks, gold ETF, Forex, ETFs, and Derivatives using a trading account. A few benefits of trading accounts are given below.
It is easy to set up and offers telephonic and online access. An investor does not need to carry physical transactions in order to buy/sell securities.
It shows the relation between gross profit and sale. This helps to measure an investor’s profitability position.
It also reflects the ratio between costs of goods sold and gross profits.