Last Updated: Mar 21, 2024 Value Broking 9 Mins 2.5K

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With the availability of tons of information regarding the financial market. Anyone can seize the opportunities and start improving their financial portfolio. The Indian stock market has grown to become a huge market with different opportunities for various securities.

Anyone who has a bank account along with the Demat and trading account can participate in online stock trading. Various types of trading accounts can be used for different trading purposes. To learn about different types of trading accounts, you can read the information below.

An online trading account

An online trading account is a must-have account for investors and traders to participate in the stock market in India. It is similar to a bank savings account, but you have to use a trading account to buy and sell securities. Various companies in India provide the facility to open a trading account. You can open as many trading accounts as you want, but handling every trading account can be challenging. With the availability of trading accounts, it became easier to trade and invest in the Indian stock market. 

With a trading account, you can get one point access to major exchanges in India, where trades and investments on different securities take place. 

  1. Bombay Stock Exchange (BSE)
  2. National Stock Exchange (NSE)
  3. National Commodity and Derivatives Exchange (NCDEX)
  4. Multi Commodity Exchange (MCX)

Types of Trading Accounts

There are six types of trading accounts in India. 

  1. Cash Account 
  2. Margin Account 
  3. Equity and Derivatives Trading 
  4. Commodity Trading Account 
  5. Equity & derivative trading account
  6. Share Trading Account
  7. Option Account 
  8. The Offline And Online Trading Account
  9. 3 in 1 trading account

What are the Benefits and Features Offered by a Trading Account?

Benefits of a Trading Account

The benefits of a trading account make it a good choice compared with physical trading. Here are some benefits own a trading account are:

  • In today’s time, most trades and investments take place online. 
  • You can lower your investment and trading fees with a trading account.  
  • A trading account is a single roof with many functions so that you can trade with different types of securities. 
  • A trading account holder gets the flexibility of accessing their account from anywhere at any time. A user can handle their financial portfolio with a simple browser or a smartphone.
  • Modern technology ensures trading account holders get better transactional capabilities.  The entire process of funds and equities can be completed without any interruption. These factors allow clients to save and invest in the share market through a secure medium.
  • In a broker application,  customers can get support from a professional executive in case of any technical issues. A trader can also customize a personal alert through a message or an email to ensure they do not miss the buy or sell targets.
  • With an online trading account, customers get the benefits of placing an order at any time. Even though the market hours are limited, you can still place an order to buy or sell your securities.  The app provides a 24×7 service for placing a buying or selling order.
  • Trading apps succeed in inequity and other investing opportunities. You also get opportunities for reliable research reports and insight from a professional financial advisor. These types of research help an investor to be well equipped with the knowledge and make full trading decisions. This can also significantly increase the chance of traders to make more profits and earn better investments through smart investments.
  • Many top online trading platforms offer investors to monitor all of their investments and simultaneously buy or sell shares. The trading platform has an easy-to-use interface and offers sharp performance. You can also download reliable and clear trading account statements from the trading platforms.
  • The details shared from the investor’s online trading account clearly displayed. The charges include brokerage fees, taxes, and other fees. A clear fee structure helps users to understand the complete picture of their investment and what will be their profit and loss.

Features of a Trading Account

A trading account offers varying features, but it depends upon which stockbroking firm where you can open the trading account. 

  • You can quickly convert your assets into money.
  • You can quickly place an order for buying and selling any security. 
  • The trade settlement is possible within a short period. 
  • You will get easy and quick access to the stock market in India. 
  • You can trade and invest in securities.
  • You can conveniently execute your trades and investments. 
  • It helps you in Wealth building, Retirement planning, Tax returns, Insurance, Investment Advice, etc. 
  • You can set alerts and notifications based on your requirements with a trading account.
  • You can carry out trades and investments seamlessly with an online trading account. It provides a seamless way to transfer funds from one place to another.
  • Flexibility comes with a trading account. A trading account is accessible at any time from anywhere.

Different Types of Trading Accounts

There are various types of trading accounts that you can choose from as per your requirements. Let’s discuss each of the different types of trading accounts briefly —

Cash Account

In a Cash Account, you have to pay the total amount of all your purchased securities. All the money and securities held in your cash account belong to you only. There is no option like borrowing funds from your stockbroker for making transactions.

Margin Account

A Margin Account allows an option like borrowing funds from your stockbroker for trading. Thus, you can purchase securities using sole funding. But there is a certain level of risk that comes with it. When your purchase security loses value, you will get a call from your stockbroker to quickly deposit the securities or cash into the account. There is a chance that your securities may get sold to cover up the loss. 

Commodity Trading Account

Commodity trading takes place in primary economic products rather than manufactured products. Hence, a commodity trading account allows you to trade and invest in primary economic products such as agricultural produce, gold, oil, etc.

Equity & derivative trading account

In F&O trading, you need to have an equity trading account. The value of these accounts depends upon the agreed value of security or assets. This account is now open with the trading members of the stock market.

Share Trading Account

This type of account facilitates you to buy and sell shares only. You can’t trade and invest in Securities other than stocks using this type of account. And there are various types of shares available in the market to execute. 

Options Account

An Option Account allows you to participate in the options segment. You will get an option to buy or sell at a predetermined period at a predetermined price. To open an options account, you will have to meet the requirement of high net worth. 

The Offline And Online Trading Accounts

Unlike old days, offline trading accounts don’t comply by doing all the trading activity in the physical format. Offline trading simply means that you have to open a trading account with a broker, and for buying and selling any securities, you need to communicate with a broker. The broker can be your financial advisor also who can suggest you invest or not in a particular deal. You don’t need to operate your trading through a desktop or a smartphone in an offline trading account. With an online trading account, you get a broker platform such as a web-based application and a smartphone application to trade in the Indian stock market manually.

2 in 1 or 3 in 1 trading account

The function of trading activity starts by adding funds from your bank account to the trading account. After adding funds, you buy financial securities from the stock market. The securities that you bought will be stored in your Demat account. These all steps are simple procedures of online trading. As per our topic, the 2 in 1 account is an integrated Demat and trading account that most brokerage companies offer. And the 3 in 1 account is a bank account integrated with both trading and Demat accounts. Most banks offer these 3 accounts in India. Nevertheless, due to advanced technology, many broker firms are providing a wallet system to maintain funds and provide a faster trade experience. 

Trading accounts based on the broker service

In addition to trading accounts, you also get several types of broker services. The two types of broker service with your trading account are a full service and a discount broking service.

A discount broker service is a type of trading service where a broker offers a trading facility. You get an online portal to execute your trade, or you can simply call and perform your trading activity. In this type of trading, the trading charges are low. You don’t get the premium of research reports or expert opinions regarding stock and other financial securities with discount broking.

In a full-service broking, you get additional benefits apart from your trading and Demat account. The broker firm provides you with research and insight related to the financial market. You also get resources to learn and improve your knowledge of the stock market. A full-service broker also provides you with a financial advisor that will consult you on buying or selling securities. 

Conclusion

There are various types of trading accounts available in India. You just need to understand your expectations and requirements to choose the best trading account for you.  On the trading account, the settlements of your trade take a T + 1 day.  In simple words, it means that if you trade and make a profit of Rs.10,000/- on T day. The profit of this value will be available for you to withdraw only on the T + 1  business day. But you can use this value to invest in other securities on T day or as soon as you earn the profit. A trading account opens the door to achieving lots of investment opportunities. It doesn’t matter if you are a beginner or an intermediate trader. You can make your investment into a significant return. I hope you will find this article helpful in selecting the trading account out of the different types of trading accounts that suit your financial goal best.