What are the different types of Trading Account and what are their benefits?
The first step in trading process is opening a trading account and a demat account. A few banks and registered members of exchanges (brokers) offer this facility to clients. The trading account can be linked to a bank account and is used to place buy and sell orders in the stock exchange. The shares are held in electronic form in demat account which permits to transfers when you buy or sell sharesusing your trading account.
A Demat account can be said as what it is to shares, similar to what bank accounts are to money. All you need to do is, select a service provider who is a depository participant with either National Securities Depository Ltd (NSDL) or Central Depository Services Ltd (CDSL) and complete the application process.
Once your application passes examination, you will be given an account number or a client ID to access your account online. Payment of annual fee, transaction charges, and any other associated fees will be specified in the rules and regulations.
A commodity demat account has to be opened with a commodity broker registered with the National Securities Depository Ltd (NSDL) and this will enable you to trade with the National Commodity and Derivative Exchange (NCDEX), the National Multi Commodity Exchange of India Ltd, and the Multi Commodity Exchange of India Ltd (MCX). With a commodity trading account, you can trade in agricultural, metal and energy commodities.
The procedure of getting a forex trading account is more or less similar to the others and once this is set up you can buy and sell any currency.
Preference includes buying currency from the NSE or the MCX. One noteworthy differentiation in the forex market is that you can buy futures that are to be settled up to 12 months later.
A number of clients from brokerage houses and banks might be eligible for perks such as unlimited trading and zero brokerage in all these segments. All three accounts can be opened simultaneously.