Know What is Trading Account Charges & Fees, and Eligibility Criteria?

Introduction

Many new people are making an entry into the wonderland of investment. They are opening new demat and trading accounts. You may notice that your neighbour has started discussing stocks with you. You may also be tempted to start dealing in stocks yourself. However, there are a few trading ABCs that you should be well versed with before you take the plunge. Trading account is a vital aspect of share markets, and understanding them is where you can begin.

What is a Trading Account?

A Trading Account is your gateway to buying and selling equity shares, bonds traded on stock exchanges. As the name suggests, you can electronically trade shares and securities in the stock market through a Trading Account. In earlier times, dealings in the stock market took place through an open outcry system. Digitalization has replaced these timeworn systems with something as convenient as a Trading account.

How does a Trading Account work?

Your Trading Account is a link between your Demat and bank account. It facilitates the sale of your shares by debiting them from your Demat Account and credits the money to your bank account. Conversely, in the case of share purchases, it credits shares to your Demat Account and debits money from your bank account. 

Additional Read: Everything You Need to Know About Demat Account Charges

Additional Read: 7 things to know about a Demat Account

You can get your own Trading Account through registered brokers. Your trading account is mapped to a unique trading ID which enables you to conduct transactions in the stock market. You need not be worried about the security of your transactions and the safety of your money as each of the Trading Accounts is password protected. ICICI Direct is a registered broker that can help you open a Trading Account online quickly.

Why should I have a Trading Account?

To begin with, it is mandatory as per SEBI guidelines to have a Trading Account if you want to invest in the stock markets. When you have an online Trading Account, you have trade access to multiple products from multiple stock exchanges that you can buy and sell from anywhere in the world. Trading Accounts have revolutionized the process of trading in the stock market significantly. It helps you to capture timely profitable opportunities through lightning-fast dealings from your comfort zone.

Charges for Opening a Trading Account Online

Ample stockbrokers are providing a trading account in India. Service quality, features, and charges may be suitable parameters to choose the best one among them. The Trading Account charges are usually nominal. Typically, you can break the Trading Account fee structure,

• One-time Account Opening Fee
• Account Processing Fee
• Annual Maintenance Fee

There are multiple schemes available to open a Trading Account. And your account opening charges depend on the scheme you choose. Broadly, the account opening fee ranges from 0 to 975.

Eligibility Criteria to Open a Trading Account Online

It is easy to open an online Trading Account, as the eligibility criteria are comprehensive for it.

Age

You should be a minimum of 18 years old to open a Trading Account and have trading access to it. If you are a minor, you can also have a Trading Account, but you will not have trading access to buy or sell orders directly with a stockbroker. A minor’s account has to be operated by the natural guardian till the minor turns 18 years. And you can use it only for selling securities that the child has possessed through investment in IPO, inheritance, gift, corporate action, etc.

PAN Card

You need to have a valid PAN Card.

Demat and Bank Account

You need a functional Demat and Bank Account to have a Trading Account. Submitting either of these can do the job here - A Cancelled cheque, Bank Passbook, latest 6-month Bank Statement.

KYC Documents

It would be best if you had a completed KYC for a Trading Account. You can do that by submitting some usual documents to your broker as under:

Income Proof:

You need this if you want to trade in Futures and Options. Submitting either of these can prove your income - Latest 6-month Bank Statement, 3-month salary slip, ITR statement, Demat Statement.

Identity and Address Proof:

You can provide documentary proof for one of the following - PAN card, Aadhaar Card, Driving License, Passport, Voter ID Card. For address proof, you can also submit up to a 3-month old utility bill or bank statement

You also need your passport photo and signature on white paper that matches your PAN Card.

Conclusion

It’s never too late to start trading. There are always wealth creation opportunities waiting to be explored. But before you open a Trading Account, it is advisable to get your documents in place and understand the features that the trading platform offers. This homework will keep your account opening process smooth and facilitate your trading mechanisms in the best way possible.