Trading accounts offer many benefits, such as the ability to trade in financial markets and hold financial assets. However, due to various reasons, some investors may still choose to close their trading accounts. Fortunately, the account closure process is simple and takes only a few minutes. In this article, we’ll take a closer look at how you can close a trading account and the possible reasons behind making this decision.
Reasons for Closing a Trading Account
Before we discuss this further, it is important to understand why investors may opt to close them in the first place.
- Lack of Success
Unsuccessful trades are often one of the major reasons why people may choose to close a trading account. However, the proper use of trading strategies can increase the chances of making successful trades. Traders could consider practising with a demo account to fine-tune their skills and trading strategies before deciding to close a trading account permanently. - Multiple Trading Accounts
Since there’s no limit on the number of trading accounts you can have, many individuals open multiple accounts. Too many accounts can make it hard to track and monitor trades and investments effectively, prompting traders to close less frequently used accounts. - A Lack of Proper Support from the Stockbroker
Inadequate support from stockbrokers is another reason why traders may be interested in knowing how to deactivate a trading account. People often close their accounts with their brokers if they’re unhappy with the services provided.
How to Close a Trading Account?
Here’s a step-by-step guide explaining how to deactivate your trading account.
- Step 1: Notify your stockbroker
If you intend to close your trading account, you first need to notify your stockbroker and provide the reason for closure. - Step 2: Clear all pending balances and open positions
Once you’ve notified your stockbroker, the next step is to clear all pending dues, if any. Usually, the pending dues will show up as a negative balance on your trading account. To settle them, all you need to do is transfer funds into your trading account to bring the dues down to zero. Alternatively, you can also send a cheque to your stockbroker.Also, if you have any intraday or derivative open positions on your trading account, you must square them off before initiating the account closure process.
- Step 3: Fill out the account closure form
Download the trading account closure form from your stockbroker’s website or obtain the same from the nearby branch. While filling out the form, ensure you do not leave any empty fields. - Step 4: Sign the account closure form
In the case of a trading account with a single holder, the signature of the sole holder will be enough for account closure. However, if it is a jointly held trading account, you must get the signatures of all the account holders to proceed with the account closure process. - Step 5: Submit the completed account closure form
Once you’ve filled out and signed the trading account closure form, you must mail it to your stockbroker. Alternatively, you can also physically submit it at the nearest branch.Remember that the account closure process outlined above is merely meant to be illustrative. The actual process that you need to follow may vary depending on the stockbroker with whom you have the account.
Closing a trading account – Things to note
Now that you know how to close a trading account, let’s quickly look at some key things you should remember before initiating the account closure process.
- If you’re also closing the demat account linked to your trading account, remember to sell the securities or transfer them to another account before closing it.
- It is essential to ensure that neither your demat account nor your trading account has a negative balance before initiating the account closure process.
- Stockbrokers don’t levy any charges for closing a trading account.
- Trading account closure requests may take anywhere from 7 to 10 working days to be processed.
Conclusion
This concludes the details of how to close a trading account quickly. That said, you need to remember that when you close your trading account, you cannot purchase securities from a stock exchange or sell the securities lying in your demat account. So, before you take such a drastic step, it is advisable to think it over thoroughly.
