Thus, venturing into the realm of stock trading especially when it’s the first time an Indian investor can be at the same time exciting as well as scary. In the open world, the expansion of the Indian stock market has been faster in the recent past years where investors have been accorded several opportunities to gain their riches. Nevertheless, to invest at the exchange you must have a trading account opening that you use to buy and sell the shares. This is the critical initial step to demystify the complex field of financial markets hence bridging this knowledge gap.
As you know, stock investing is also associated with certain negative outcomes apart from high returns. The “need to know” will equip you with what is essential to make sound decisions when you venture into the stock market investment in the Indian market.
1. What is a Trading Account?
The trading account is the initial point to consider while investing in the stock market. This kind of bank account enables you to purchase and sell securities for instance stock, bonds, mutual funds and the likes. Look at it as a financial investment company where you can invest, trade and hold many different financial securities. The trading account is compulsory for any investor who wishes to trade in the intraday system prevalent in the India stock exchange like NSE & BSE.
This means every single time you open a trading account and enter the market you are in a way hiring the stockbroker who comes in between you and the stock market. Here at this broker, you get equipped with the tools and the setting that enables you to implement trades. This is because Trading account is often associated with a bank account whereby the trader can transfer the amount from Trading account to investment account if he or she wants to invest more in other securities or transfer the amount back to the bank account if he or she wants to sell his or her shares and get cash.
2.Types of Trading Accounts
It is important that you be acquainted with the three different sorts of trading accounts in the Indian financial framework. All of them serve a specific purpose and fit different investment needs. Recognising these varieties will help you to decide which best suits your trading profile and your financial requirements.
Let us start with looking into the following types of accounts: The first among them, and maybe the most frequently used, is the Cash Account. As the name suggests it will be dealing with, this account deals with currencies. When buying stocks in a cash account, all the cost of purchases have to be in your account. With this type of account, one could buy stocks with the hope that he or she would hold them for a long time and thus is suitable for anyone who is planning to keep the investments for a long time.
3. Choosing the Right Broker
It is important that one makes the right choice of stockbroker especially during the initial phase of one’s trading career. Your ally in the stock market will be your broker; he will provide you the accessories, the vehicle, and sometimes, advice that you require to firmly elbow your way in the complexity of the stock exchange. In India, there are different brokers from which to choose, and all of them have different trading terminals, fees, and services. Selecting wisely will have great implications on your trading experience as well as possible gains apropos of the investment.
That is why the first thing which a buyer should pay attention to while choosing a broker is their reliability and reputation. Find brokers that possess a positive history and have been in the Indian market for a long time. Check that they are a member of BSE and NSE and are SEBI registered also. This is particularly the case because one can find out from other traders regarding the reputation of the broker as well as the broker’s financial status.
4. Documents Required for Opening a Trading Account
In India, to open a trading account before that one needs to submit a number of documents proving his/her address and identification. To a large extent, such documentation is critical to avoid fraudulent actions and to ensure stability in the overall financial markets. To open a trading account for the purpose of trading there must be an attachment of necessary documents on some level that will differ with the brokerages you are applying with.
Nevertheless, the first and foremost document You should keep is Your Permanent Account Number (PAN) card. Every Indian taxpayer receives a personal identification number – PAN, which acts as a key to any financial activity in India, including the account to trade. You will be required to upload a photocopy of the PAN card and for some processes; they will ask you to provide your PAN details online as a fast validation.
5. The Account Opening Process
When you have gathered all the necessary documents you are ready to begin with the process of opening an account. This procedure has improved in the recent past and most brokers now offer online application forms. Having a trading account is far easier and faster today due to this electronic method that often allows you to start trading within the week of opening the account.
In order to open an account, one has to fill the account opening form. The personal information to be provided on this form is your name, address, birth date and telephone number. You will also be required to fill in your bank account details and your PAN as well. Today, most brokers have online KYC which enables the user to take clear pictures of other documents or scans and submit through the app or the broker’s website. Some even propose video KYC solutions whereby you would be able to verify your identities through a video conference with a broker’s representative.
Conclusion
The most important variable of the investment process that one has to work on to become an investor in the Indian stock market is to open the first trading account. The share market account opening is therefore a process that must be well considered from time to time for choosing the best broker to understand the costs and even construction of the trading floor. You will remember that investment in shares has both advantages and disadvantages including the ability to build wealth.
