Cash Trading and How it is Done - Complete Understading

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Trading is of two types- Cash & Margin Trading. In margin trading we require some margin amount to trade but in contrary to this Cash Trading Provides the trader, an oppurtunity to trade from the only cash he/she is having in trading account.

For Cash or any trading, a trader needs to have three things:

1. Bank account
2. Trading account
3. Demat account

All the three have different purpose for which it has been designed. Bank account requires to be linked to trading account so the money could be settled in that account while executing the trade.

Trading account for a trader ensures the platform where he use to trade in different stocks being available for trsde in secondary market.

Demat account relates to the place where the stocks being kept after settlement. its the vault of owned stocks for a trader or investor.

Cash trading is considered to be the wise decision specifically for new or beginner because it has no time boundation as of intraday trading. Here the trader can buy and hold the stocks for a long time to wait for the price to shoot up.

One and only drawback could be the amount of brokerage and commission to be paid to broker in terms of cash whereas it is lesser in intraday or margin due to volume of holding.

Saket Kumar Singh

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