uTrade Algos
Investing in the stock market requires patience and thorough research. Regardless of one’s profession, anyone can enter the retail investing space at any time, thanks to the ease and affordability of trading. A trading account is as essential for trading as fuel is for a vehicle. In the era of paper trading, physical shares were traded through hand gestures and verbal communication, requiring significant time and effort. However, the Internet revolution has transformed trading, making it simpler and faster with the dematerialisation of stocks. Before delving into trading accounts, it’s crucial to understand their types and individual features. Let’s explore further.
Table of Contents
Types of Trading Accounts
There are various types of trading accounts in India, depending on the trade and type of trade you are involved in.
Equity Trading Account
- This account can be traded in stocks, futures, and options.
- An equity trading account is not eligible to make other types of trades than just equity trades. So, whatever stocks you buy in the stock market, it will be directly stored in your Demat account.
- If you trade in futures and options, a trading account is sufficient, as no delivery is involved in the futures and options.
Commodity Trading Account
- It is used to trade in the commodity market.
- Commodities are frequently used by professional traders to hedge market risks. You need to open a separate trading account for commodity trading.
- Prior to the advent of online trading, the regulatory bodies for commodities and equities were distinct, and they were not subject to the jurisdiction of the SEBI; however, the regulator of the trading account is now the same for commodity trading.
Online Vs Offline Trading
Offline Trading
- Requires physical presence at the broker’s office.
- Does not offer online trading through desktop or mobile apps.
- Orders are placed by calling the broker.
Online Trading
- Enables trading through software, website, or mobile app.
- Allows independent trading without the need for a physical interface.
- Traders are solely responsible for their stock market transactions.
2-in-1 Account Vs 3-in-1 Account
2-in-1 Account
- Combines trading and Demat accounts.
- Offered by financial firms.
- Streamlines transactions for smooth trading and holding.
3-in-1 Account
- Integrates savings, Demat, and trading accounts.
- Provided by financial banks offering stock trading services.
- Ensures faster fund transfers and reduces the likelihood of errors or delays in transactions.
Accounts Based on Brokerage Service
India has two common brokerage services. These are the discount brokerage and a full-time broker service. In short, your trading account can be a full-service or discount brokerage trading account.
- A discount broker service offers online trading services with low brokerage costs.
- A full-service brokerage, you can get additional services such as research reports, stock advisory services, and news related to the financial market.
You can open a free Demat and trading account with Share India. The Share India platform offers to invest in different types of securities along with advanced technology to trade without any interruption.
Types of Trading
Various types of trading exist in the financial markets, catering to diverse investment styles and goals. Understanding these trading approaches is essential for investors seeking to navigate and thrive in dynamic market environments.
Day Trading
- It is a form of trading where a trader buys and sells stocks in a single day. This type of trading also refers to intraday trading.
- It is one where a trader buys stocks and holds for several minutes or hours depending upon the change of price and when the stock price reaches to target price or near it, the trader closes the position.
- The trader often uses huge volumes to trade in this segment.
- The trade depends upon the small fluctuation of stock price, which happens on a single trading day.
Scalping
- This approach is commonly referred to as micro-trading, resembling intraday trading but focusing on a subset within it.
- Traders engage in small-profit transactions, capitalising on minute or second movements in stock prices, with the scalping process occurring multiple times within a single trade.
- It is a short-term trading strategy.
Swing Trading and Momentum Trading
- Swing trading aims to maximise profits from short-term trends in stocks, typically within a few days of acquisition.
- Technical traders analyse stock movements to identify patterns, requiring practice to yield returns.
- Momentum trading focuses on stocks with significant upward or downward movement, as traders aim to capitalise on the momentum exhibited bystocks showing potential signs of breakout.