How to open a stock trading account?

how to open a trading account

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How to open a stock trading account?


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What is stock trading account?

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  • trading account is necessary to buy or sell shares in the stock market. It is an access provided by registered stock broker (trading member) to trade in Stock exchange.
  • Trading account helps us to find out gross profit or gross loss during an accounting period.
  • Trading account consists of two sides ‘debit and credit’.
  • All direct expenses and outflows are debited and direct incomes and inflows are credited in trading account.
  • Trading account contains mainly purchase, sale of shares and expenses relating to the trading account such as AMC, other value added services subscribed by the client from the broker.
  • Any discrepancies found in the trading account need to be addressed immediately, otherwise a client can escalate to the regulator SEBI (Securities and Exchange board of India).

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What to check before opening a trading account?

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It’s important to choose the right broker. First you need to search for SEBI registered stock broking firms.  Since stock market relies on time basis and risk varies periodically, you need a broker who is approachable, responsible, reliable and responsive.

In India , we have various categories of stock broker who exist to serve clients.

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  • Full services brokers, who generally offer human assistant to their clients and they are generally expensive.
  • Low cost broker, may provided superior platform but offers less human assistance, but the cost to trade are generally low.
  • Regional brokers, these brokers are approachable, generally maintains one to one relationship with clients. They provide some value added service based on the individual clients requirement. These broker provide in-house space along with dealer for clients to execute the trades. They generally have limited clients and their brokerage cost is high.
  • Bank brokers, these names are popular as they must be having well established brand in the field of financial industry, Although the brand is common, they broker entity is different from the banking entity (e.g  ICICIBANK is different from ICICI Securities). They are known for convenience and reliability. But their brokerage and other charges are relatively higher than other brokers.

Brokerage charges may vary depending upon the nature of stocks and amount of trades to do.

  • Higher volume trader
    • Pros: Get Low Brokerage deals.
    • Cons: High volume tend to have capital risk.
  • Low Volume trader
    • Pros: They may not be forced to trade with high volume.
    • Cons: May not get personalized services from broker.
  • The Equity delivery trades are generally expensive than the equity intraday, futures and option trades.

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Key price checks before opening a trading account.

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  1. Account opening charges.
  2. Processing fees.
  3. Price of value added services.
  4. Brokerage rates and its terms.
  5. Annual maintenance charges.

Compare the brokerages and try to find which suits your investment style. After finding your broker it’s time to open trading account.

Broker may have franchises, branches and Sub Brokers to carry out the services. All are equally good, they follow the terms and conditions of the parent company. However their services levels depends on the head that particular branch.

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 Process of opening a stock trading account.

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The Below seven steps could help you to get you account opened

  1. Fill account opening form “Know Your Client” (KYC) with the chosen firm.
  2. Submit particulars of proof of address and identity.
  3. Account opening charges are levied at the time of opening which will be in the form of a Cheque favouring the DP name.
  4. Then verification of your details shall be conducted in-person or through a call.
  5. Finally you will get a trading account number and thereafter you can start trading by buying and selling stocks.
  6. Trading account Login and Password will be issued to the account holder by the DP.
  7. You have to necessarily change your password for security reasons after first login.

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If you are willing to trade in the stock market then trading account is one of the most important accounts which you need to have. By reading the above post you would have got a clear idea of what is trading account, how to open a trading account and what are the steps to check before opening trading account. We at EQSIS provide professional training in stock training and analysis for beginners.

Feel free to post your comments and queries below!

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Article Info

Published Date: October 24, 2016
Author: Valarmurugan

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