Possessing a demat account is a mandatory prerequisite for investing in the share market. However, it may not always be enough. If you’re planning on trading in the stock market through the stock exchanges, then you’ll also need another account – a trading account. Wondering what this trading account is and what documents you would need to open one? This article will cover the answers to both of them. Let’s begin with what a trading account is.
A trading account is an electronic account that essentially gives you access to the stock exchanges. With this account, you can browse through the entire gamut of securities that are listed on the stock exchanges for trading. This includes shares, bonds, mutual fund units, and Exchange Traded Funds (ETFs), among others. That’s not all. In addition to being able to browse through them, you can also place buy orders and sell orders for your favourite securities through the trading account.
There are a whole host of differences between a trading account and demat account. Fundamentally, they’re completely different with purposes that are in stark contrast to each other.
A trading account merely enables you to buy and sell shares and other securities on the stock exchanges. A demat account, on the other hand, allows you to store the shares and other securities that are bought by you through the trading account. Now, that’s why your demat account is almost always linked to a trading account. Finding it hard to understand? Here’s an example that can help give some clarity.
Let’s say that you’re interested in a stock – Tata Consultancy Services Limited (TCS). And you wish to buy 100 shares of this stock. You’ve also opened a trading and demat account with a stock broker like TradeSmart Online. Now, to purchase 100 shares of TCS, you will have to log into your trading account, search for the stock of TCS and place a buy order for 100 shares. And once the buy order that you placed gets executed, the shares that you bought will automatically be transferred (credited) to your demat account that’s linked to your trading account.
And similarly, when you wish to sell the 100 shares of TCS, you will have to again log into your trading account and place a sell order for those 100 shares. Once the sell order is also executed, the shares that were in your demat account would automatically be transferred (debited) out of your account.
So, as you can see from the process above, the trading account and the demat account do two different things, yet their functions are carried out in a synchronised manner.
To understand the importance of a trading account, let’s assume that you don’t have a trading account and that you only possess a demat account. Now, you will not be able to purchase any shares or other securities trading in the stock exchanges without a trading account.
However, with just your demat account, you can apply for and invest in Initial Public Offerings (IPOs) of companies. Let’s now assume that you’ve applied for an IPO and have managed to buy 100 shares of the company, which is now in your demat account.
Without a trading account, how will you sell these shares that are currently stored in your demat account? This is precisely why a trading account is as important as a demat account. Without it, there’s very little use for a demat account.
Now that you’ve understood what a trading account is and its importance, let’s now move on to the documents that you would have to submit to open one.
TradeSmart allows you to open both a demat and a trading account in just a single and hassle-free process. Here’s the list of documents that you would have to provide to open a trading account with TradeSmart. All of the below mentioned documents must be self-attested with your signature.
Here’s something that you should know. The list of documents that are displayed above are applicable for TradeSmart trading accounts only. Although other stock brokers may also require a very similar set of documents for trading account opening, the list of documents required may be slightly different as well. So, that’s something that you should account for when trying to open a trading account from a different stock broker.
Now that you know what you need to do to open a trading account, what are you waiting for? Visit TradeSmart Online right away and initiate the demat and trading account opening process now! Follow this link to quickly get started.
Yes. Submission of your PAN card details is mandatory to open a trading account.
If you’re opening a trading account for the purpose of trading in the following segments - F&O, currency, or commodity, it is mandatory to provide the last 6 months worth of your bank statements. In all other cases, it is not mandatory.
The following documents are accepted as proof of address for opening a trading account with TradeSmart.
Yes. Your passport size photo must be affixed on the first page of the trading account opening form. That’s not all. You would also have to sign across the photo, with half your signature on the photo and the rest on the account opening form.
Of course. To open a trading account online, simply visit the website of TradeSmart Online. You can also choose to submit all of the above mentioned documents online by uploading scanned copies of them as well.
Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.
Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.
Open Demat Account &
Trade @ Rs15 per order.
“Filing of complaints on SCORES – Easy & quick”
Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.