A Comprehensive Guide to Different Trading Accounts in India

It’s like your ultimate pass to the stock market. A trading account makes buying or selling securities as easy as online shopping.

As a trader in India, you have access to a vast array of options. That’s a good thing, but it can also feel overwhelming.

Each type of account offers unique functionalities and is tailored to meet different investing needs. We’ll go over each type and what you can expect from them so you can decide which one is right for you.

Types of Trading Accounts in India

Several Indian trading platforms offer many, if not all, of the following types of trading accounts. If you trade with Zerodha, Upstox, Angel One, TradePlus Online, FYERS, Sharekhan, or any other broker, you will benefit from understanding these accounts and how they can benefit you.

Increasing number of demat accounts in India

Equity Trading Accounts

First up, we have the most fundamental type of account, the equity trading account. This account is your ticket to trading in futures, options, and stocks.

Equity trading accounts can be broken down into two further categories:

• Cash Account: Used for trades with an upfront payment in cash.
• Margin Account: Gives you the flexibility to hold intraday positions by putting down a minimal margin. It also allows you to buy and sell futures and options, provided you pay the required margins.

This type of account comes in handy when you’re borrowing from the broker to invest.

This basic equity account is all you need to trade options and futures. However, it’s just one piece of the puzzle. If you’re looking to invest in IPOs or take delivery of shares, you’ll also need a Demat account, as required by the Securities and Exchange Board of India (SEBI).

Commodity Trading Accounts

A commodity trading account is an account you set up with a Trading Member (also known as a Commodity Broker) of a recognized Commodity Exchange (such as MCX, NCDEX, and others available in India).

It’s similar to an equity trading account. You deposit funds into your commodity trading account and then use them to trade commodity futures.

All settlements are typically processed on a T+1 day basis, meaning that if you make a profit today, you’ll see it in your account the following day. However, if you incur a loss, it’s deducted on the same day.

Multi Commodity Exchange (MCX) is one of the more popular commodity trading platforms in India. With an MCX trading account, you can access a wide range of commodity futures contracts and participate in price movements.

Online and Offline Trading Accounts

When placing stock trading orders, you have two options to choose from: offline and online.

To do it offline, you will need to call your broker and tell them your order to buy or sell securities.

ICICI Direct takes this traditional approach to trading. Customers can visit ICICI Direct branches and get in-person investment advice from experienced brokers.

If you’re a tech-savvy investor, online trading accounts might be more your speed. These allow you to place orders right from a trading app or web-based platform.

Upstox is a great example of this. You can use their platform to place a trade with a few taps or clicks – no phone call needed. You can trade whenever and wherever you want, even outside business hours.

Two-in-One and Three-in-One Trading Accounts

You might have come across terms like “two-in-one” and “three-in-one” when exploring trading accounts in India. Here’s the difference:

• Two-in-One Account: Provides you with a unified access point to your trading account and Demat account.
• Three-in-One Account: Provides you with a unified access point for your bank account, trading account, and Demat account.

These interlinked accounts give you a smoother, faster online trading experience.

The beauty of a three-in-one account is how versatile it can be. Your bank account gives you a place to stash your savings, while your trading account lets you trade in various market instruments. It’s like a one-stop shop for all your financial needs.

While two-in-one accounts can be perfectly suitable, most traders prefer a three-in-one account since it allows them to easily move funds between their banking and trading accounts.

Even without a three-in-one account, you can make the process smoother. For instance, Kotak Securities provides two-in-one trading accounts in India while also offering bank services. This allows investors to manage all their funds through a single institution.

Discount Trading Accounts

A discount brokerage account is your basic, no-frills trading account. Angel One Account and other brokers who specialize in this type of account offer call and trade capabilities but don’t provide any offline trading options.

While these accounts can seem pricey due to the high volumes traded at low costs, they can actually be quite a bargain for investors. This is due to the low brokerage feels, which are made possible by the broker’s low operating costs.

As long as you’ve got a discount broking account, you’re all set to execute trades. But remember, they’re all about the basics. Don’t expect any extra perks like financial advice or research services.

Full Service Trading Account

A full-service trading account gives you access to financial advice services, which can be a real game-changer when you’re grappling with trading decisions.

It’s like having a personal assistant for trading, saving you precious time by doing the heavy lifting when it comes to market research and decision-making.

HDFC Securities is a popular provider of full-service trading accounts in India. With an HDFC Securities trading account, investors gain access to a wide array of investment options, including equities, derivatives, mutual funds, IPOs, and bonds.

Final Thoughts

A trading account is your gateway to the world of investing and a tool that can help you rake in substantial profits.

Now that you’ve got a good grasp of the different trading accounts available in India, it’s time to figure out which ones best align with your trading goals.

For example, if you’re looking for ease and simplicity, you might opt for a discount trading account. If you’re thinking of making substantial investments, a full-service account might be the more prudent choice.

Remember that it’s also important to choose a trustworthy brokerage firm to open your trading account. Trading with a reliable broker will help you avoid hiccups in your trading journey and ensure that your funds are safe and secure, no matter what type of account you choose to open.