How to Open Trading Account Online

In the stock exchange, opening a trading account is the doorway into investing. A trading account is important for beginners and experienced traders to buy and sell shares. 

This article will discuss how to open a trading account, the eligibility requirements, the documents needed, and some key considerations before selecting a broker. 

What is a Trading Account?

A trading account is an account through which investors can buy and sell financial instruments such as stocks, bonds, commodities, and more. It is usually connected to a demat account where acquired securities are kept electronically, and also connected to a bank account for money transfer. 

A trading account acts as the essential link between an investor’s demat account, bank account, and the stock market. It facilitates the buying and selling of shares. If you wish to trade in equity shares, having a trading account is mandatory which is opened along with the demat account.  

In simple words, it is used for the execution of stock market trades while demat ensures that shares bought are kept safely.

Steps to Open Trading Account Online

Here are the simple steps to open trading account:

Step 1: Select a Broker

Choosing a broker that seamlessly facilitates your buy-and-sell trades is essential. Before making a decision, compare the features and charges of different brokers. Reputed brokers like Rupeezy provide the data for necessary analysis that an investor will require and also offer a 5x margin for F&O trading along with other types of margins which makes it unique from its competitors. 

Step 2: Complete the Application Form and Submit KYC Documents

After selecting a broker, you will need to fill out an application form to open a trading account, which is usually available online for convenience. The form will ask for basic details like your name, contact information, and bank details. Additionally, you'll need to submit the required KYC (Know Your Customer) documents, such as an Aadhaar card, PAN card, and, if applicable, an income certificate for F&O trading, as per SEBI regulations.

Step 3: Account Verification

After you submit the application and the KYC documents you will undergo a verification process that will usually be completed within 24 - 48 hours depending on the broker. Any document that appears to be incorrect/mismatched in the details can be rejected by the broker.

Step 4: Account Activation

Once the verification is completed, you will receive a confirmation via email, call, or SMS along with your login credentials.

Step 5: Start Trading

Using these credentials one can access the trading account and start buying and selling in the stock market.

Eligibility Criteria to Open Trading Account

You need to meet the following criteria to open a trading account: 

• Age: The age of the trader is an important criterion for opening a trading account. The trader must be aged at least 18 years.

• Residency: In India, residents as well as non-residents can open trading accounts, but the process of opening the trading account might differ for NRI’s.

• Valid PAN Card: The trader who wants to open a trading account must have a valid PAN card mandatorily in India.

Documents Required to Open a Trading Account

There are specific documents that are necessary to open a Demat and trading account for various purposes. They are:

1. Proof of Identity:

PAN Card - It is a government-issued identity card that has unique characters for all taxpayers in India. It is made mandatory for all traders and investors who wish to open a trading account to possess a PAN Card to ensure the financial transactions comply with the tax laws.

2. Proof of Address:

To verify the address of the investor/trader one must provide any valid government-issued documents as proof to open a trading account. This is to ensure that the broker has the correct contact information in case of any issue. Some of the examples for legal documents are:

• Aadhaar Card

• Voter ID

• Passport

• Driver’s Licence 

3. Bank Details

The brokerage will require one’s bank details to open a trading account to facilitate the fund transfers between the bank account and the trading account. This will make sure that the transactions take place uninterrupted when you buy and sell stocks. 

Some of the documents that might be required for this purpose would be:

• Canceled Cheque

• Bank Statement

4. Income Proof

In order to trade in derivatives, you will be required to submit income proof while opening the trading account to activate the F&O (futures and option) trades in the exchange. This ensures that one has the financial power to meet the margin requirements needed for trading in derivatives. Either of the following documents can be submitted as an income proof

• Salary Slip - 3 months

• Income Tax Return 

• Bank Statement - 6 months

• Stock holding’s Portfolio(in order to activate the F&O transaction)

Key Factors to Consider Before Opening a Trading Account

Below are the factors to consider before choosing a broker to open a trading account:

• Brokerage Charges: Make sure that your broker charges lower rates and brokerage fees compared to its competitors. 

• Features: The platform should provide all the necessary features that a trader would require like the various charts, analysis tools, margins, and so on.

• Research Support: Certain brokers offer research reports and trade advice to their traders which can be helpful to beginners and experienced traders.

• Additional Benefits: Most brokers like Rupeezy provide additional services like educational resources through blogs, and social media platforms like Instagram and YouTube content to help traders understand the concepts better.

Trading Account Fee and Charges

Before opening a trading account, one must know the different types of charges involved in trading. The brokers charge brokerage fees for executing one’s trades in the market. Demat charges cover the maintenance of your Demat account and these are usually billed annually or quarterly. In addition, transaction charges are applied on every single trade which is imposed by stock exchanges and depositories. Finally, Goods and Services Tax (GST) is imposed on brokerage and other applicable charges. 

Here is a detailed overview of the charges and prices at Rupeezy:

• Account opening charges = Free

• From 2nd Year = a fee of Rs. 25 is charged for monthly maintenance charges.

• Brokerage charges: 

  a) Equity Delivery: No brokerage charge per order. However, it includes a 0.2% charge on MTF (Margin Trading Facility) and 0.35% on purchases made within the same week (Intraday Week).

  b) Equity Intraday: The brokerage is either 0.03% or Rs. 20 per order, whichever is lower. Additionally, there's a 0.2% charge on MTF and a 0.35% charge on buy orders within the same week.

  c) Equity Futures: A flat brokerage fee of Rs. 20 per order.

  d) Equity Options: Rs. 20 per order for carry forward (CF) positions (without margins)

  Rupeezy provides a 5x margin for options buying and charges ?20 per lot for entering and ?20 per lot for exiting the position.

  e) Intraweek Charges: Intraweek is a new feature introduced by Rupeezy where the traders can hold stocks with a 5x margin for a period of 1 week, at a 0% interest rate.

Conclusion

Opening a trading account is your first step toward entering the stock market and taking control of your financial future. Once your account is set up, you can begin exploring investment opportunities and work towards achieving your financial goals. 

You can easily open an account with Rupeezy through a simple, paperless, and online process with no account opening fees. Download the Rupeezy trading app for a seamless experience.