Trading account definition

What is a Trading Account?

A trading account is an investment account. It contains the cash and securities holdings of an investor. Trading accounts are commonly used by day traders to buy and sell securities, and so tend to experience high transaction volumes. An investor may employ several of these accounts, each for a different purpose. For example, one account may be used for trades related to a pension, while another is used for general investment purposes.

How to Open a Trading Account

You can open a trading account with a brokerage firm by filling out its online application form and then placing the brokerage’s minimum funding requirement in the account. If you want to trade on margin, then you will also need to complete the brokerage’s online margin agreement and fund the account with the initial margin requirement mandated by the brokerage.

Related AccountingTools Course

Investing Guidebook