Understanding the basics of your Trading Account…

A trading account is your gateway to buying and selling shares in the stock market. It is very exciting to be a trader in the stock market but it is essential for the trader to be well informed about the markets. Here is a trading account guide for you…

How is the trading account different from a demat account?

A trading account is used for transactions in the stock market. You need a trading account for buying and selling shares in the stock market. Demat account holds your shares. Like you deposit cash in the bank, your shares get deposited in the demat account. Your trading account is linked to your demat account. When you buy shares your demat account gets credited and when you sell shares your demat account gets credited.

What is meant by T+1, T+2 and T+3 with respect to trading account?

In trading account parlance, “T” refers to the trading day and T+1 is the next day after the trading day. When you sell shares, the shares get debited to your demat account on T+1 day. When you sell shares, your bank account will get credited by T+2 days. When you buy shares through your trading account, your demat account gets credited by T+3 days.

If my order is not executed immediately, how long will the order be open?

By default all orders placed by you in your trading account will be valid till the end of the trading day. If the order is not executed by the end of the day then the order stands automatically cancelled. You can also place an IOC (Immediate or Cancel) order wherein the order is automatically cancelled if it is not executed immediately on placing it. You can check the list of open and executed orders in your order book in your trading account.

How do I place an order to buy shares and what if I make an error in punching orders?

Today, brokers like Religare Securities give you the seamless online experience wherein you can operate your trading account, demat account and bank account online. You can place your order to buy or sell shares in your trading account. Stock markets operate on the best price formula. Let us understand this aspect a little better! Assume that Reliance is currently quoting at Rs.975 and you by mistake place an order to sell Reliance at Rs.945. The market will still execute your order at the best price. So if the buyer is available at Rs.974, then your order will get executed at Rs.974 not at Rs.945. The similar formula holds even when you are a seller. The system will ensure that you get the best possible price for your sale of shares. It is also possible to cancel an order that you have placed, but that has to be done before it is executed. Once the order is executed, you cannot cancel the order.

You can ask us your stock related questions with #AskReligareOnMarkets via our Twitter channel @religareonline.

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