A trading account is an investment account that is generally a day trader’s primary account. It may contain cash, securities and other investment vehicles.
Assets held in this account are typically separated from those that are held as part of a long-term strategy.
A trading account is distinguished by the level of activity, the level of risk it involves and the purpose of activity in the account.
For this account to be legitimate, you must have funds coming directly from your name into an account that is set up in your name.
Investors no longer only have to rely on stockbrokers to trade for them, mainly thanks to the prevalence of online trading. This enables them to open a trading account and to have access to it so they can monitor the performance of their investments. This type of account also enables investors to set their own personal trading limits.
A trading account is linked to the bank account that is providing the necessary cash to buy or sell securities. Multiple accounts are also permitted. In South Africa, in order to open a trading account, brokers will require FICA documents, such as an ID and proof of address. The account may be funded by EFT, or other online payment processes like PayPal.
Factors to consider when opening a trading account:
A frequency of transactions- how often will you be placing trades? Typical day-trading involves the buying and selling of stock within the same day.
Reliability of the platform- is the platform easily accessible and efficient?
Cost-efficiency of the service- how much is it costing you to keep this trading account open?
It’s important to start with a demo account before starting to trade on a Live account. This gives you enough time to learn more about the art of trading.