What is a Trading Account?
A trading account is an account that allows you to buy and sell securities like stocks, commodities, derivatives, and other financial instruments in the stock market. It acts as a bridge between your bank account and your Demat account.
While a Demat account holds your securities in digital form, the trading account is used to place orders and execute trades on the stock exchange. Whenever you want to buy a share, the trading account uses money from your bank account to make the purchase. Once the transaction is complete, the shares are credited to your Demat account. Similarly, when you sell shares, the trading account takes them from your Demat account and sends the sale amount to your bank account.
Key Features of a Trading Account:
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Real-time Trading: Lets you place buy/sell orders instantly during market hours.
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Linked Accounts: Connects your Demat and bank accounts for smooth transactions.
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Access to Multiple Markets: You can trade in equity, commodities, futures, and options.
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Online Platforms: Most trading accounts offer web and mobile apps for easy access.
In summary, a trading account is necessary for executing trades in the stock market. Without it, you cannot actively buy or sell shares. For a complete stock market setup, you need all three accounts: Bank account + Trading account + Demat account.