What is an online trading account?

What is an online trading account?

by Prasanth Menon Last Updated: Jul 05, 2023 - 03:27 pm 200k Views
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An online trading account is a compulsory account required to be opened by an investor to trade in the share market. An online trading account works in the same manner as a bank’s saving account and is required to buy and sell securities while trading.

While a demat account holds the shares bought by an investor, the actual buying and selling  is done through the trading account.

Features Of An Online Trading Account

Basics of an online trading account

In the past, the stockbrokers were the one who bought and sold shares on the behalf of an investor. They had the ultimate power to buy and sell securities based on their research and gut feeling. Thanks to an online trading account, investors can now buy or sell securities according to their will and can choose the companies they want to invest their money.

When you open an online trading account and trade through it, your instructions get automatically directed to the stock exchange through your broker. If you want, you can get your stockbroker’s advice in the process, but the ultimate decision to invest is always yours.

In order to buy or sell shares in the Indian stock market, it is compulsory to have a trading account apart from a demat and a bank account. You can open multiple online trading accounts which are easier to open and trade through when compared to a traditional trading account.

Features of an online trading account

  • You can buy or sell shares from any platform: a desktop or your mobile phone.
  • You get regular real-time market information about the companies and stocks when you open an online trading account.
  • Using special facilities, you can even place after market orders through an online trading account.
  • Expert recommendations are available to let you make profitable investment decisions.
  • A trading platform that allows quick and real-time trading options without having to travel to your stockbroker's office.

Benefits of an online trading account

When you open an online trading account, all you have to do is place an order, and rest is taken care of by your online brokerage firm. You don't have to visit the office of your stockbroker or call him every time you want to talk business.

By means of an online trading account, you can even chat online with your stockbroker to place an order. Whether you are on your job or at a place where you can`t access a computer, you can still trade from an online trading account by using your mobile phone. It is that easy.

How can you open an online trading account?

You can open an online trading account by hiring a good online brokerage company. The representatives and experts of the company will open an online trading account for you.

You will have to fill an account opening form and attach certain documents. After the formalities go through, an online trading account will be opened for you, and you can start trading in the stock market.

Keep in mind that you should always go for a brokerage firm which charges a flat brokerage fee, rather than charging a commission on all of your transactions. It will allow you to reduce trading costs and increase profits by a considerable margin.

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