All You Need to Know About a Trading Account

Posted by Jessica on April 11th, 2017

Mid-90s saw the advent of trading through an electronic medium. Paper shares dematerialized into a demat account and transactions over the counter seized and drifted towards computer screens instead. If you are entering this field for the first time, here’s how to go about it.

The most important step of advancing your trading career is to familiarize yourself with the trading account. This account makes electronic transfer of shares possible and thereby serves like the backbone of stock trading today. Let’s get a more comprehensive insight into this type of account:

All You Need to Know about How a Trading Account Works:

-  A stock broker will manage trades on your behalf.

-  You broker can be an individual or a firm working for you.

-  Your broker will charge a brokerage as a fee for the provision of services, after every transaction.

-  You will need your photo ID proof and address proof, in order to open your trading account.

All You Need to Know about Opening this Account:

-  Find a broker.

-  Get the account opening and Know Your Customer (KYC) forms, which are usually available online.

-  Submit the form with required documents.

-  Appear for in-person/telephonic verification.

-  Get your trading account details.

All You Need to Know about the Key Features of this Account:

-  Consists a credit side and a debit side.

-  Considers direct expenses and direct revenue.

-  First stage of final accounts.

-  Prepared at the end of an accounting year.

All You Need to Know about the Role of this Account:
This account—

-  Calculates gross profit and gross loss.

-  Measures the efficiency of your trade.

-  Helps determine the profits earned.

Demat account is another very important account involved in this type of trading. It serves as a bank—where shares that you buy are deposited in and the shares that you sell are extracted from.