What is Trading or Brokerage Account ? - Margin Account Webull

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Trading or Brokerage Account means an account through which orders to buy and sell shares are sent on the stock exchange. When we do trading in the share market, the work of withdrawing and depositing money during trading is done through the bank account. When we sell shares, the shares get transferred from our DEMAT account to the trading account at the time of selling. It is also necessary to have a trading account for investing in Mutual Funds.

If you also want to invest in share market, then what is Trading and Brokerage Account for you and what is DEMAT and Trading Account meaning? This should be complete information. In this article, we are going to give complete detail information about Trading Account, which will definitely prove useful for you, just read the post till the end.

What is Trading or Brokerage Account ? – Margin Account Webull

Trading account is called trading account or Brokerage account. The account prepared by the trader to get information about the profit or loss arising from trading within a specified time is called Trading Account. The trading account is used to transfer money to buy shares in the stock market and place orders to the stockbroker for buying and selling of shares.

This account is linked with our DEMAT account, and with the help of trading account, when we place an order to buy shares in the stock market, and our order is completed, then the purchased shares are credited to our DEMAT account. . And with the value of the shares we buy and with the tax and brokerage charges, money is deducted from our trading account.

Similarly, when we sell shares, the sold shares are deducted from the DEMAT account, and the amount of the sold shares gets deposited in our trading account after deducting brokerage and tax. We cannot place orders to buy and sell any shares or shares directly from the stock market, our stock broker transmits orders to buy and sell our shares to the stock market.

So the stock broker opens an account, which is called Trading Account, to access all our buy and sell orders to the stock market.

How to open Trading or Brokerage Account

To open or create a Trading or Brokerage Account, you must have a demat account, when you open a demat account, you can also open your trading account from the same. The broker links your trading account with your demat account.

You can approach a Depository Participant (DP) who is a broker or sub-broker of NSDL or CDSL to open a trading account. Today many banks and institutions are working as DPs.

Apart from these banks, there are many private financial institutions across the country who are acting as DPs, whom you can contact to open a trading account and open your trading account.

Documents required to open a Trading or Brokerage Account

In order to open a trading account, you will need the following documents mentioned below:

Account opening form
Photo ID Proof: PAN Card / Voter ID / Passport / Driving License / Aadhar Card.
Address Proof: Telephone or Electricity Bill/ Ration Card/ Passport/ Voter ID/ Driving License.
Bank account number
Passport size photo

Advantages of Trading or Brokerage Account

Keeping Shares in Trading Account is very beneficial, because Trading Account gives us many types of facilities like:

This makes buying and selling of shares very easy.
It also provides debit and credit card facility to buy shares.
With the trading account going online, the brokerage charges have become much less than before.
With a trading account, you can buy and sell shares from anywhere in the world.
Deducting money on buying shares and depositing in the account on selling are done automatically.

Difference Between Trading Account and Demat Account

To trade in share market both demat account and trading account is necessary. However, there is a difference between these two, which you have been told about below:

Trading account is used to place buy or sell orders in the stock market, whereas DEMAT account is used as a store to deposit shares. Means trading account is used for transactions, and demat account is used to keep shares safe.

Let us explain you through an example, suppose when you buy shares using your trading account, the money is withdrawn from your bank account and the shares are deposited in your DEMAT account.

Similarly, when you sell shares, the shares are withdrawn from your DEMAT account and sold in the share market, the amount received from selling the shares is deposited in your bank account.

Once the investor has successfully opened his/her trading and demat account, he/she can place buy/sell orders as per their convenience on their mobile phone or online. With most things going online, investors now get their business details online, which makes it easier for them to make their important decisions on time.

What is The Best Brokerage Account

Here is the list of top 10 best demat account in India 2021

Zerodha Demat Account – Best discount broker in India
Upstox Demat Account – Great for an alternative to Zerodha
5paisa Demat Account – Best for no AMC for only traders
IIFL Demat Account – Great for first year free
Angel Broking – Great brokerage plan from full-service broker
Sharekhan Demat Account – offers a wide range of financial products
Religare Demat Account – Great for lifetime free AMC option
Motilal Oswal Demat Account – Great for financial services
ICICI Direct Demat Account – Good for ICICI account holders
HDFC Security Demat Account – Option for HDFC account holders

1 Zerodha

Why Zerodha is at 1

Most trusted broker in India
Fix Rs. 20 per trade on intraday trades
Zero brokerage on the stock delivery
Good customer support
Best charts and tools for technical analysis

Account Charges

Demat & trading account opening charges – Rs 200
Commodity account opening charges – Rs 100
Annual maintenance charges – Rs 300 per year

Zerodha Brokerage Charges

Equity Delivery- zero brokerage
Equity Intraday- 0.03% or Rs 20 per executed order whichever is lower
Equity Futures- 0.03% or Rs 20 per executed order whichever is lower
Equity Options- flat Rs 20 per executed order

Zerodha Trading Platforms

Zerodha Kite 3.0 – A complete trading solution for the investors and traders that provides streaming price data, multi-market access, advanced charts and simple UI.
Kite by Zerodha Mobile App – A mobile app version of Kite 3.0 for a seamless trading experience, especially for the young generation (Android/iOS) smartphone users.
Zerodha Coin – A platform that lets you buy direct mutual funds online without paying any commissions.

Key Benefits of Zerodha

Delivery is totally free. No brokerage on delivery.
No minimum cap of brokerage per transaction.
Maximum brokerage charge capped to Rs 20 irrespective of transaction volume.
Provide a margin from 4 to 15 times.

2. Upstox Demat & Trading Account

You will get the fastest & best online trading platform in India with Upstox

Why Upstox is at number 2

Get free brokergae credit of Rs 1000
Rs. 20 per trade for equity delivery
Zero stock deliver brokerage
Fast account opening process

Upstox Limited Time offer

Prepaid Brokerage worth Rs 1000 valid for 7 days

Upstox Account Regular Fee & Charges

Upstox Demat and Trading Account Opening – Free (limited time offer)
Upstox Annual Maintenance Charges – Rs. 25 per month

Upstox Trading Brokerage Charges

Type	Brokerage
Equity Delivery	Rs. 0
Equity Intraday	Lower of Rs. 20 per executed order or 0.05%
Equity Futures	Lower of Rs. 20 per executed order or 0.05%
Equity Options	Rs. 20 per executed order
Currency Futures & Options	Lower of Rs. 20 per executed order or 0.05%
Commodity F&O	Lower of Rs. 20 per executed order or 0.05%

3. 5Paisa Demat Account

5Paisa charges the lowest brokerage charges of flat Rs 10. per trade under the addon Ultra Trader pack

Why 5Paisa is at 3

Lowest brokerage charges of Rs 10 per trade
Zero brokerage on delivery
Fastest account opening process
Offers the best trading app with easy to use.

5Paisa Annual Charges Details

5paisa offers an All-in-one investment account with 2 different addon packs

Research & Idea Pack – Rs. 499 per month. Brokerage Rs. 20 per trade and AMC Rs. 45 per month.
Ultra Trader Pack – Rs. 999 per month. Brokerage Rs. 10 per trade and NIL AMC charges.

You need to pay maintenance charges only for the traded month under the Research & Idea pack.

5paisa account opening is FREE.

Margin provided by 5Paisa

Trading Segment	Research & Idea Pack	Ultra Trader Pack
Equity intraday buy	Upto 20x	Upto 20x
Equity intraday sell	Upto 10x	Upto 10x
Equity Futures	3.5x	3.5x
Equity Options – long	1x	1x
Equity Options – short	3.5x	4x on normal days, 6x on expiry days
Currency Futures	3x	3x
Currency Options	Long – 1x Short – 3x	Long – 1x Short – 3x
Commodity Futures	Upto 2x	Upto 2x
Commodity Option	1x	1x

5Paisa Brokerage Charges

5Paisa offers two addon plans – the Research & Idea pack and the Ultra Trader Pack. 5Paisa brokerage charges under different both the pack are under;

Trading Segment	Research & Idea Pack	Ultra Trader Pack
Equity delivery	Rs. 20 per executed order	Rs. 10 per executed order
Equity Intraday	Rs. 20 per executed order	Rs. 10 per executed order
Equity derivatives	Rs. 20 per executed order	Rs. 10 per executed order
Currency derivatives	Rs. 20 per executed order	Rs. 10 per executed order
Commodity derivatives	Rs. 20 per executed order	Rs. 10 per executed order

Note – Under the Ultra Trader pack, the first 100 trades are free every month. From 101st trade, you need to pay a flat fee of Rs. 10 per executed order on all segments.

5Paisa Trading Platforms

5Paisa Trader Station Web – 5Paisa is for the low volume traders. The web-based platform gives easy access to portfolio, positions and holdings data.
5Paisa .EXE Trader Terminal – The trader terminal is for high volume traders which provide a powerful interface and fast execution. You get a real-time market price, advanced charts with tools and past stock prices.
5Paisa App – The app is for trading on smartphones with easy access to markets and a great user experience.

4. IIFL Demat Account

IIFL Demat account is good for investors who need guidance and research support while making investment decisions.

IIFL Account Opening Charges

Account opening charges – FREE
First-year annual maintenance charges – FREE (limited time)
Annual maintenance charges second year onwards – Rs 250

IIFL Brokerage Charges

Stock delivery – Free
Intraday, futures & options – Flat Rs 20/trade

Benefits of IIFL Demat Account

Free account opening & zero first year AMC
Lower brokerage charges as compared to other full-service brokers
Research reports on 500+ stocks, sector summary, daily stock tips and recommendations
Value-added services like IPO & mutual fund investment.

5. Angel Broking Demat Account

Angel broking is one of the oldest brokerage companies in India having 2.15 million broking accounts.

Angel Broking Provided Trading Platforms

Angel Broking Trade – A web-based platform useful for portfolio tracking and online web trading. The platform provides up-to-date market information and live news. I use Angel Broking trade platform for transactions.
Angel Broking App – Loaded with ARQ technology for personalized advisory. The app can be used to trade, view current market prices and track your portfolio.
Angel Speed Pro – An installable software comes with 30 days intraday and 20 years historical data. The platform integrates news flash and gives access to various reports.

Additional Services

Margin provided up to 10 times of the amount deposit.
You can start trading within 1 hour through digital KYC.

Account Charges of Angel Broking

Trading Account Opening Charges – Rs 0.
Demat Account Opening Charges – Rs 0.
Annual Maintenance Charges – Rs. 0 for the first year then Rs. 450 per annum.

Here you can learn other Companies review – Click Here

What is A Margin Account Webull

A margin account allows an investor to borrow against the value of the assets in the account to buy or short sell new positions. Investors can use margin to leverage their positions and take advantage of both bullish and bearish movements in the market. Margin can also be used to make cash withdrawals against the value of the account in the form of a short term loan.

Webull is a solid stock and ETF trading platform that doesn’t cost you a penny in trading commissions. There is also no deposit minimum for cash accounts.

Experts created Webble for active traders looking for a more in-depth tool than most free platforms. These include easy access to technical indicators, research agency ratings, financial calendars, live data and more.

A Weeble margin account differs greatly from a cash account.

A margin account lets you take advantage of already existing funds and securities to basically borrow money from Weeble to make more investments.

In other words, you do not need to have cash to cover your trades. Instead, it is based on the value of your portfolio at that time snapshot. Traders borrow on margin to use more money for investments, hoping to end up with higher profits.

Margin Trading Meaning

Margin trading involves buying securities by taking a loan from a stockbroker.

Using this process, the trader is able to buy as many securities (assets) as he can at any point in time.

Margin trading provides the necessary leverage to the trader or investors.

However, margin trading has high profits and returns along with the potential for huge losses.

A margin trader should be well prepared for both these aspects.

A brokerage company who borrowed money at a lower rate but they made a profit by lending the same money to other traders at a higher rate Along with this, they keep the securities bought by them as collateral. However, there is no guarantee that the trader will make a profit at the end of it all. As a result, the trader may incur more losses than expected.

Due to the high risk involved in margin trading, margin trading is regulated by various bodies like SEBI and they have many rules and regulations that we have to follow.

Margin Trading Definition

The technical definition of margin trading is as follows:

Margin trading is a type of additional funds that you borrow from a stockbroker to trade. This process is called margin trading. This fund is used by a trader to increase profits in his trading account.

Margin trading process in India

Following are some basic steps to be followed to use margin (or leverage) for trading in India. which are listed below:

The trader opens a margin account with his broker and maintains a minimum amount in it which is also known as minimum “margin money”.
Once the margin account is opened, the trader can start trading and the broker can also borrow some money to buy more securities.
However, the trader has to deposit a certain percentage of the purchased price of the securities in the initial margin account opened with him and the broker.
During trading, all traded shares should be squared off after each session.
This means if a trader has bought shares then they should be sold at the end of each session and if sold then they should be bought.
Simultaneously a maintenance margin of the shares should also be maintained on profit or loss basis, which should provide some minimum amount to the traders even after squaring off.
If the maintenance margin is not met, margin call is triggered by the broker due to insufficient margin funds.
After the trade, each order is converted into delivery, which goes directly to the broker’s account to ensure that the loan has been paid.
The broker should then have enough cash to buy the shares and pay the broker’s fees and other charges.

The above points show that margin trading is a process through which a regular retail trader can earn additional profits if he is confident about his trading decision.

As long as you maintain the broker’s margin amount, you have to pay an interest to the broker, which is a means of earning money for the broker. At the same time, both the parties (broker and trader) also carry some risk wherein the broker offers you a kind of loan and trusts your trading call. The broker holds the shares purchased by you as collateral to protect himself.

Whereas you, as a trader, borrow a fund from the broker to trade, which you are not able to afford on your own.

Example of margin trading

Let’s take an example from real life:

Manmohan, who is an intermediate level trader in Mumbai and has a capital of ₹20,000/-. He opens a margin account with this capital and then borrows ₹80,000/-.
Now, here ₹20,000 is his initial margin.
He buys 500 shares of IBM valued at ₹ 170/- per share using ₹ 1,00,000/- in his account.
In this way, Manmohan makes a total investment of ₹ 85,000/- which he could not have done without margin trading.
Now, two scenarios stand out here.
In the first scenario, if the share price goes up to ₹190 per share, he makes a profit of ₹10,000. This is a profit of 50% on the money invested by Manmohan.
This shows a side of margin trading, where the trader makes profit, which he could not have done without margin money.
But in the second scenario, if the price of his securities goes up to ₹150/- per share, he still receives the margin call which will result in a loss of ₹10,000/- only.
This loss he has to pay to the broker along with his fees and other charges.
This shows the downside of margin trading, as if he had invested less money he would not have made huge losses.

Margin trading exchange

Under SEBI regulation, the facility of margin trading is provided by most of the major stock market exchanges in India, including:

NSE
BSE
mcx
NCDEX
NMCE – NMCE
ICE

Remember, over 95% of retail stock market investments are covered by the exchanges listed above. Thus, if your stockbroker is a member of these exchanges, you will be able to easily use margin in your trades.

It is recommended that you check the broker membership details before opening your demat account.

Margin trading rules

There are certain rules for margin trading that you need to follow in all your margin-based trades. However, the list of these rules is not very long.

If you do not follow these rules, you can lose a lot of money.

These rules are as follows:

You need to maintain a minimum margin amount in your trading account. The reason behind this is that the stock market is volatile.
You never know when and what has changed in the value of your investment. Thus, a minimum margin amount must be maintained.
You can convert the placed intraday trade into delivery trade and hold the stock in your demat account. However, an additional charge will be levied for this.
You should square off your position before the end of the trading session. If you do not do this, the broker will auto square-off your position.
But this auto square will be done at the market price which is not right for your trade.

Margin Trading fees

As mentioned above, when you are using margin trading you take a “loan” from the stockbroker. And when you take a loan, you have to pay “interest” on the principal amount. Now, in the context of the stock market, this interest rate varies from broker to broker.

However, it is up to the customer to know what interest rate he will have to pay on the profit received.

Let’s say your stockbroker is charging an interest rate of 18%.
Let’s say you are trading ₹1 lakh with a “loan” of ₹90 thousand from a broker and using ₹10 thousand from your trading account.
Thus, for these ₹90 thousand the interest rate for the whole year at 18% would be: ₹90 X 18% = ₹16200 / p.a.
If you calculate the interest amount per day it will be ₹16200/365 or ₹44.30.
If you are taking a position T + 5 (could be T + 3 or T + 10), you will pay ₹ 44.30 X 5 i.e. ₹ 1221.5.
This can be seen as your margin trading fee!

Is Margin Trading right or wrong?

To answer this question, a trader has to look at both the sides. You can make an accurate assessment by understanding the pros and cons of margin trading.

Let us first talk about the advantages of margin trading.

Benefits of Margin Trading

Let us talk about some of the benefits of using margin trading to the traders in the stock market:

Margin trading has proved to be very useful in enabling its traders to make profits. In this, traders are able to buy more security than their capacity and then earn more profit from them.
In this, traders can take advantage of new trading opportunities, as they do not have to worry too much about their funds.
They are also able to make changes in their portfolio by hedging.

What is A Paper Trading Account

A paper trade is simulated trading that helps investors and beginners to learn and practice trading without having to bet their own money. Paper trading usually involves a stock market simulator that gives you a similar experience to trading on a real stock market.

How to do paper trading and make profit?

Decide on a penny you want to invest and note it down on a paper. Select the stocks of your choice and list it. Enter the current price of those stocks along with the listed stocks. Divide the sum of the amounts you wish to invest by the number of shares to get the amount per share to be allocated.

Subtract ₹20 brokerage or transaction fee from that figure for each share.
How long should you do paper trade? However, there are differing opinions on how long one should initially stick with paper trading. So the answer is 1 or 2 years. For beginners, paper trading should last at least not more than 4 weeks.

Advantages of paper trading

The introduction of simulated software for stock trading has increased the popularity of paper trading in India. There are some online brokers that offer free paper trading accounts. No commitment of real money to invest: You can do paper trading to get an estimate of your investment without real money.

Option to try new investment strategy

By not investing in the actual stock market, you can experiment with new strategies and plan your investments. However, to estimate the profits and losses of your investments, you must follow real trade practices.

The stock market, paper trade investor should follow the same standard procedure as he would in the real market. Although you are not using a live account, your investment strategies should follow real trade practices to survive the real stock market dynamics. A paper investor should accept the same risk-reward results that he would have expected while doing a live transaction.

Paper trading also has the same constraints as live account trading.

Features and Practices of Paper Trading

Paper trading is simulated trading that enables new investors to learn to trade in securities and practice in securities.
By taking advantage of paper trading, you can test investment strategies and plan before implementing it on a live account.
Many brokers offer online paper trading accounts.
PaperTrades enables investors and beginners how to navigate the fake app/tool to make trades.
You do not exist in real market conditions.

Paper trading through live account

Paper trading is similar to real stock trading. Before paper trading you should have basic stock market trading knowledge. Real trading can be much easier than paper trading. However, in this you cannot be sure that the return you get in it and the actual return may differ. This is because unlike the real market, paper trading does not confirm the extent of the actual risk of losing real money.

Paper trading involves basic investment strategies such as investing at a low price and selling at a high price. However, this will not be a real situation when trading with a live account. Thus paper trading can lead to confusion.

Read more article here:

The Mindset Behind Paper Trading

Professional investors and traders can be driven by different emotions and decisions when working on the real market. Since the risk of losing real money in real trading is high, decisions made during paper trading may seem irrational in real trading.