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What is a Trading Account?

Trading account is an account used to buy and sell shares. It is maintained by financial institutions and administered by the trader. This type of account can be compared with bank account to understand in an easy manner. Just as our saving bank account holds the cash, trading account holds securities. Just as savings bank account is offered by many banks like ICICI, HDFC, SBI, trading account is also offered by many broking firms like India Infoline, Share khan, India bulls, SMC etc.

There is a bit confusion among the traders on the number of trading accounts and demat accounts one could open. Let’s try to put that away. It is recommended to open only 1 demat account and as many trading accounts as per traders wish. All the trading accounts can be linked with 1 demat account. There are many reasons why a trader needs to open many trading accounts.

To avoid confusion – A perfect portfolio management requires more than 1 account at least to self test the trading style. In detail, if a person has 10 lacks, he can split 5 lakhs for investment, 3 lakhs for intraday equity markets and 2 lakhs for intraday commodity markets. After 1 year, he could better self test which of the three is better in terms of returns, trading style etc. Apart, it also makes easy at the time of tax payment.

Trading Terminal – Some broking firms has good software terminals. So at times, traders needs to change or open a new account for the better trading experience.
Brokerage – Last but not the least, some broking firms charge more brokerage which may make it necessary for the trader to open another account.

Posted By: Pankaj                 Posted on: 2016-05-12 11:35:51                 Updated on: 2016-05-12 11:35:51