Things to Know Before Opening Trading Account

Whenever you opt for a stock trading course, probably the first thing you’ll be asked to do is open a demat account. A demat account will store all your securities in electronic form, and you can open this account with a registered Depository Participant like Angel One.

For obvious reasons, you’ll also need to link your bank account to carry out transactions. However, one crucial element required to connect this entire chain from placing the order to receiving the shares is a trading account.

What is a trading account?

A trading account connects your demat and bank accounts to facilitate the sale and purchase of shares. You have to open a trading account because it acts as an interface to carry out securities transactions.

You can link your bank account to the trading account and transfer money there to purchase shares. When the transaction is completed, shares are automatically stored in the demat account. The reverse happens in the case of the sale of shares.

You can also use the trading account without a demat account in case you trade in futures and options since they don’t require any storage of assets.

Things to keep in mind before opening a trading account

When it comes to trading and finances, one can never be too careful. Even though the securities sector is heavily regulated by SEBI to mitigate the chances of fraud and protect investors, it never hurts to double-check everything and recognise potential red flags on time.

1.      Open trading account and demat account with the same broker

Most brokers like Angel One provide the service of opening demat-cum-trading accounts. In case that service is not available with the broker of your choice, opening both accounts at the same place will help make the entire transaction process smoother and seamless.

You will also save yourself the hassle of coordinating between different brokers for the completion of the trading process.

2.      Check the software efficacy and user interface

You want the transaction process to be seamless and hassle-free. For that, you have to make sure that you are comfortable with the user interface of the broker’s website or mobile application.

You should also check if the software utilised by the broker to link the demat, trading, and bank accounts are robust and can handle the process without errors.

3.      Calculate charges

Despite attractive advertisements by brokers to open trading accounts for free, hidden charges are often involved. You may be able to open your account for free, but you will be charged a maintenance fee for the account. Make sure to check the charges beforehand and ensure that you are comfortable with them.

4.      Support provided

Only trade transactions can’t be all that your broker provides. They should also offer ancillary services like recommendations, financial data, dealing with issues like pledges and customer complaints, etc.

They must make sure that physical shares are dematerialised quickly and corporate actions are carried out timely. The quality of such services will add to your overall experience.

5.      Check the reputation

This one is something a stock trading course will emphasise on, and they aren’t wrong. Ask around about the broker, take recommendations from friends and family, read investor reviews, and check for any cases against the brokerage to ensure trustworthiness.