To start trading in Indian financial markets, you need to open a trading account to place bids for buy or sell orders. Without one, you cannot trade in stock markets. It all happened in the mid-90s when the stock exchanges adopted the electronic system. With that electronic system, all trades which once placed through the counter starts processing through the computer instead. Thus, to do seamless trading of shares in Indian stock market on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) you need to open a trading account.
What is a Trading Account?
A trading account is an online platform for an individual where he/she can buy and sell securities/derivatives/Bonds/ETFs. With a trading account, a trader can conduct online transactions in the stock market.
How to Open a Trading Account in India?
The steps to open a trading account are as follows:
- Find a Broker – The very first step is to find a stockbroker or firm. For your information, there are two types of stockbrokers – full service and discount. A full-service stockbroker is not just a broker who will help you in opening a trading account but also help you in a variety of services along with buying and selling of shares such as financial advisory, research as well as retirement and tax planning. However, the discount stockbrokers are rather new in India where you can have a trading account with the necessary trading facility at the least possible cost. Just make sure that whichever stockbroker you choose, take your orders in a timely manner. Time is of utmost importance in the stock market where anything can happen within seconds.
- Compare Brokerage Rates – It is also important to consider that “what fees your broker is charging from you to process your orders”. The charges may vary from brokers to brokers. It is because some brokers give discounts on the basis of the frequency of trades. Some give discounts on the basis of the time So, it would be smart to discuss the fees before opening a trading account and compare the brokerage rates to get the feasible one. Also, you don’t have to choose the lowest fees.
- Get in Touch – Now that you have the chosen the stockbroker, it is time to get in touch and enquire about the procedure of opening the trading account. Whether it is facilitated with a company representative who will provide the forms to fill up and resolve your doubts. Generally, the stockbroker or a representative of the firm provided home assistance with the comfort of having documentation completed at your home. If that’s the case then the representative will come to your home with two forms – account opening form and the Know Your Customer (KYC) form.
- Complete KYC – You would be required to fill up both forms and submit it with along with ID Proofs and Address Proofs and submit your application. After submitting an application, your application will be verified either in-person or over the phone.
- Application Acknowledgment – Necessary document and application verification will be followed by providing the access to your account and the trading details which you can use to participate in market operations. Don’t forget of the unique trading ID which is necessary for trading in stocks.
What are the Documents Required?
Here is a broad list of documents that can be used as proofs in opening a trading account.
- PAN Card
- Driver’s License
- Voter ID
- IT Returns
- Telephone Bill
- Electricity Bill
- Bank Attestation
- ID Cards with applicant’s photo issued by central or state government of India/statutory or regulatory authorities/PSUs/public financial institutions/college affiliated to universities or professional bodies such as ICAI, ICWAI, ICSI, bar council etc.
- Voter ID
- Driver’s License
- Ration Card
- Bank Passbook or bank statement
- Verified copies of electricity bills
- Residence telephone bills
Congrats! You will be able to conduct trades in the stock market.
Now that your trading account has opened. You need to empower yourself with knowledge and enhance skills of stock market analysis. In order to learn more about the stock market, you can go for best stock market tips provided by Advisorymandi.com – India’s Biggest Stock Market Platform.
Infographics: Steps Involved in Opening a Trading Account