How To Open Trading Account Online?

For many, the term ‘trading’ invokes the image of suit-clad stock brokers on the trading floor, yelling and making frantic gestures trying to set a deal. This is how most exchanges took place till the mid-nineties. It was considered as the most effective method of matching bids and offers for conducting a share trade.

With the advent of the electronic trading system, the open outcry system has gone out of fashion. Trading floors have been replaced by faster, cheaper, and more efficient trading screens. Today, you can buy and sell shares online with just a mouse click.

A trading account facilitates such online trading of shares and stocks. Below we will learn how to open a trading account online with a stock broker of your choice. But before that, let’s dig deeper into the meaning and purpose of a trading account.

What Is a Trading Account, and Why Do You Need It?

A Demat account alone is not enough if you wish to trade securities. The Demat account holds records of your investments in electronic form. But you cannot buy or sell equities,  futures and options with it. For that, you will need a trading account.

The trading account acts as an interface between you and you’re Demat account. It helps you secure access to multiple stock exchanges like the NSE, BSE, NCDEX, etc., and trade in their securities. The account also acts as the record of your transaction flow which you can access and view later.

Thankfully, opening an online trading account is relatively easy and hassle. You can complete the process in less than 15 minutes from the comfort of your home.

How to Open Trading Account Online?

Opening an online trading account opens doors to numerous investment possibilities. Plus, the process is pretty straightforward. Here’s a step-by-step guide on how to open a trading account online.

Choose a Broker

The first step is to choose a broker with whom you can open your account. You will find many brokerage firms that offer free online trading accounts. However, before zeroing on a particular broker, there are a few considerations you have to make.

The brokerage fee is perhaps the biggest consideration one makes. But do not base your judgment solely on the charge. For instance, certain firms charge higher for value-added services such as advisory, recommendations, or research reports, which may benefit you. Also, ensure that the trading interface they provide is comfortable enough.

Fill Out the Account Opening Form

Once you select a broker, get in touch with them. They will guide you to the account opening page you can fill out online. Most brokers offer a two-in-one Demat cum trading account. You can opt for this option if you don’t already have a Demat account.

You will need to provide the following information in your account opening form.

• Name, contact number, and e-mail address
• PAN details
• Address details
• Bank account details
• KYC documents for proof of birth and residence
• Proof of income if you opt for future and options trading

You can easily reach out to the broker representative and solve your query if you find yourself stuck anywhere.

Get Your Application Verified

Post submission of the form and KYC documents, the broker will review and verify the same. Then, they may send a representative to your house for an in-person check.

Alternatively, you can opt for e-KYC verification if you do not want to verify the documents manually. But for that, your PAN card, Aadhar card, Bank account, and mobile number should all be linked.

Get Your Trading Account Details

On successful completion of the application, your broker will activate your account in 3-4 days. You will receive the confirmation for the same, along with the login credentials.

You can then login and start placing buy and sell orders. But before that, do not forget to transfer some money to your trading account first.

Documents Required to Open Trading Account Online

Opening an online trading account requires you to submit certain KYC documents, similar to opening a bank account. Here’s a broad list of documents that you can use:

Proof of Identity

• PAN Card
• Voter’s ID
• Passport
• Driver’s license
• Government ID cards
• Telephone bill
• Electricity bill

Proof of Address

• Aadhar
• Passport
• Voter ID Card
• Driving license
• Bank passbook or bank statement
• Verified copy of electricity bill
• Residence telephone bills
• A document issued by the government or its department containing your address

Income Proof (For Future and Options trading)

• 3-month salary slip
• 6-month bank statement
• Income tax returns
• Demat Holding statements
• Net worth certificate, etc.

Apart from the above, you may additionally be required to submit:

• A recent photograph
• Signature on a blank white paper
• A canceled cheque or bank statement with the account number and IFSC code

Final Words

A trading account opens you to numerous opportunities in the share market. Not just shares, you can also trade in commodities like agriculture and precious metals by opening a commodity trading account online.

The procedure is similar to opening a regular trading account. The commodity market is witnessing a windfall in its trading activity, and you might benefit from it. Happy trading!

FAQ's

What is a trading account?

The trading account is an interface between you and you're Demat account. You require it to access stock exchanges like the NSE, BSE, NCDEX, etc., and trade in securities. The account also records your transaction flow which you can access and view later.

Do I require a trading account if I already have a Demat account?

Yes. A Demat account alone is not enough if you wish to trade securities. The Demat account holds records of your investments in electronic form. But you cannot buy or sell equities, futures, and options with it. For that, you will need a trading account.

Who can open a trading account in India?

Any resident of India above 18 years of age can open a trading account and trade in securities in India, provided they have a PAN card, bank account, and proof of address. 

You can also open an account in the name of a minor child. The legal guardian can operate it until the child reaches 18. Once the child becomes a major, their holdings can be transferred to the major account.

How long does opening a trading account in India take?

Opening an online trading account in India is relatively easy and hassle-free. You can complete the process in 15 minutes from the comfort of your home. All you need to do is find a registered broker, fill out the account opening form and provide the necessary documents. The broker will review and verify your documents and activate your account in 3 to 4 days.

What documents do I need to open a trading account in India?

To open a trading account in India, you must provide certain KYC documents to the broker, similar to opening a bank account. These include proof of identity and proof of address. Documents like PAN cards, aadhar cards, passports, voter's ID, etc. can serve the purpose.

If you also wish to trade in futures and options apart from equity trading, you'll need to submit income proof, such as salary slips and bank statements.