A trading account is necessary if you intend to buy and sell stocks. Most of the brokers provide a Trading-cum-Demat account. Both these accounts are related to one another.
SEBI has made it mandatory to create a Demat Account to trade in the stock market, as all trading occurs in a dematerialized format.
Demat Account allows to hold your shares in electronically your broker. It is a repository to deposit and withdraw stocks for investing, trading, holding, and monitoring. A trading account, on the other hand, helps conduct stock trading activities, that is, placing buy and sell orders.
It links with your bank account and Demat account: A trading account links to your Demat and your bank account. You add money to a trading account through the bank account to start trading. When a buy order is executed, the stock is deposited in your Demat account. When the stock is sold, it is debited from your Demat account. All the buy and sell transactions are recorded in the trading account.
Provides trading interface: A trading account facilitates online trading through a broker. TA rading Account is the interface to view livestock market prices and place orders to buy and sell the stock. The DP sends an order placed by the trading account to the stock exchange. Once the order is executed, the DP updates the transaction in the investor’s trading account.
You can also deposit the physical share certificates for dematerialization to your DP. The shares existed as physical paper certificates before the stock exchange was digitized in 1996. While most of the share certificates are converted to digital format, you still have the option to get a physical certificate converted to digital format through your broker. This process is called dematerialization. DP will update your Demat Account after the dematerialization process is completed.
Unlike the pre-digitization era, now trading in the stock exchange has become much more straightforward and more accessible. There is no cumbersome paperwork or needing to leave the home. The option to open a free Demat and trading account has also made it convenient to start trading with no additional cost. So what are you waiting for? Get a trading account for yourself today and start your investment journey.
SEBI has made it mandatory to create a Demat Account to trade in the stock market, as all trading occurs in a dematerialized format.
Demat Account allows to hold your shares in electronically your broker. It is a repository to deposit and withdraw stocks for investing, trading, holding, and monitoring. A trading account, on the other hand, helps conduct stock trading activities, that is, placing buy and sell orders.
Role of Trading Account
It links with your bank account and Demat account: A trading account links to your Demat and your bank account. You add money to a trading account through the bank account to start trading. When a buy order is executed, the stock is deposited in your Demat account. When the stock is sold, it is debited from your Demat account. All the buy and sell transactions are recorded in the trading account.Provides trading interface: A trading account facilitates online trading through a broker. TA rading Account is the interface to view livestock market prices and place orders to buy and sell the stock. The DP sends an order placed by the trading account to the stock exchange. Once the order is executed, the DP updates the transaction in the investor’s trading account.
You can also deposit the physical share certificates for dematerialization to your DP. The shares existed as physical paper certificates before the stock exchange was digitized in 1996. While most of the share certificates are converted to digital format, you still have the option to get a physical certificate converted to digital format through your broker. This process is called dematerialization. DP will update your Demat Account after the dematerialization process is completed.
Account Opening Charges
Investors do not need to hold shares beforehand to open a Trading and Demat account. Also, no minimum balance is required. You can open a Demat and trading account free of cost with zero balance. There are two charges to consider- the account opening charge and the Demat Annual Maintenance Charge. Account opening charges vary across stock brokers. Some may provide subscription plans with a fixed annual fee that helps trade at reduced brokerage costs.Trading Charges
Brokerage
Trading in the stock exchange involves various charges. First, your broker charges a fee for the services it provides. This is levied as a brokerage on your transactions. Traditional brokers would charge a percent cost basis your transaction value. Discount brokers charge a flat fee per trade, significantly reducing the brokerage cost.Securities Transaction Tax (STT)
The government levied a tax for transacting in the stock exchange. For equity delivery trading, it is charged both while buying and selling. For Intraday and F&O trades, it is charged only while selling.Transaction/Turnover Charges
This is charged by the stock exchange (NSE, BSE, MCX) and the clearing members. It includes Exchange Transaction Charges and clearing charges.SEBI Charges
Charges levied by the Securities and Exchange Board of India for market regulations at Rs. 5/crore.Stamp Charges
This is charged by the Govt. of India for the transaction of instruments in the stock exchange and the depositories.Unlike the pre-digitization era, now trading in the stock exchange has become much more straightforward and more accessible. There is no cumbersome paperwork or needing to leave the home. The option to open a free Demat and trading account has also made it convenient to start trading with no additional cost. So what are you waiting for? Get a trading account for yourself today and start your investment journey.
