For a lot of people who are looking for a second source of income or are planning to begin their investment journey, online trading presents itself as an attractive avenue. Over the past few years, stock trading has evolved to be as effortless as online shopping. 

An investor can seamlessly engage in trading while sitting at home, lounging in a coffee shop, or armed with nothing more than a smartphone and a stable internet connection. 

No more hefty paperwork and no more waiting. All that you need is a trading account, a mobile banking application, and adequate funds in the bank account. 

And if done in the right way, trading can be quite rewarding. It can offer the potential for substantial returns. So, let us get into the details of how to trade online and how to prepare for the same. 

Trading Account

Before we discuss how to trade online let us quickly take a look at a trading account. A trading account helps you in buying  and selling financial instruments such as bonds, stocks and commodities. When a company announces its shares in the market, you can initiate a trade only through a trading account. 

Simply put, the trading account is a link between your savings bank account and your Demat account. These accounts are required to be opened by authorized brokers who hold membership with stock exchanges such as NSE and BSE in India.

Preparation of Trading Account

When opening a trading account, one of the first things you need to keep in mind is choosing the brokerage partner. You have to ensure that the broker is a reliable one.

Also, do a background check and find out that there are no incidents of server crashes during peak trading times, that is when a lot of trading transactions occur simultaneously. 

A trading account facilitates the buying and selling of shares in the stock market, a Demat account serves to digitally store the purchased shares for convenient management and tracking, however, when choosing a broker, it is recommended that you choose a broker offers assistance in opening both. 

Your trading account will show you the results of your buying and selling. It will determine the gross profit or gross loss, you, the trader, have had during the final accounts preparation stage. Broadly, we can categorise the account into 2 sides. 

  1. Debit Side
    Take a look at the debit side of the account.

    1. Opening stocks (the stock that you have in hand in the beginning)

    2. Net purchase = Total purchases – Purchases

    3. All direct expenses.

  2. Credit Side
    On the credit side exists:

    1. Net sales = Total sales- sales returns

    2. Closing stock value of goods.

The trading account thus, consists of several components. These components when calculated show either a gross profit or a gross loss. Simply put if the value of the sales made is above the opening stock’s value, after deducting net purchases, and direct expenses, then the account will show a gross profit. However, if the figures are lower, they reflect a gross loss. 


A trading account helps in getting a clear picture of your or your company’s profits and losses from the transactions that have been made. Typically prepared at the end of the year, a trading account can be a powerful tool for any investor. 

Along with real-time information, you would be in a better position to analyse your trading and make better decisions. Monitoring and managing your investments also becomes easier and simpler with a trading account. Prepare your trading account carefully and work towards your financial goals.