The difference between Demat and trading account is that demat account holds the shares and securities in digital mode, while a trading account provides the interface to buy or sell shares. Despite the different role demat and trading account play,they work together to make the trading in electronic format possible.
If you wish to invest in stock markets, there are a plethora of factors that you should be aware of. Making money in the share market is not a gamble but is a process of systematic and scientific investments. However, the starting point for any investor is to be aware about the fundamentals of demat and trading account. As this will form the crux of your trading.
Demat Account: A demat account also known as Dematerialisation account. It is simply an account which holds your financial instruments like Mutual funds, shares, bonds etc. in electronic form. Demat account is quite like the bank account. Just like in bank accounts where you store currency, in demat account you store financial securities.
Trading account: A trading account is required to conduct your stock trading activities. When a company lists the shares in the share market, trading can be initiated only through Trading account. It is used to buy/sell securities in the stock market. Once you have a Demat Account, if you want to transact in shares, you need a Trading Account. A Trading Account acts as a link between your bank account and Demat Account which allows to trade in stock markets.
You must be aware how stock market would work before digitization. Thousands of people would be shouting and screaming at the top of their voice to place their orders. Well, gone are those days as digitization has made everything available online. You can place orders through your trading account and store the bought securities in digital form in your Demat account, all from the comfort of your home and in a few clicks. Trading account enables you to participate in trading of other financial instruments, like Futures and Options, ETFs, etc.
Demat account keeps a track of all your holdings such as shares, mutual funds, ETFs etc., whereas a Trading account keeps a track of all your transactions, like buy, sell, deposits, withdrawals etc.
As a beginner investor, you need to understand the difference between a demat account and a trading account seeing as they are crucial prerequisites for trading in the Indian stock market. Here’s a table outlining the differences between these two accounts.
Particulars | Demat account | Trading account |
---|---|---|
Definition | A demat account is a digital account that enables investors to store shares and other securities electronically. | A trading account is a digital account that enables investors to purchase and sell shares and other securities on the exchanges. |
Role | The primary role of a demat account is to store securities electronically to prevent theft, loss or damage. | The role of a trading account is to facilitate the placement of buy and sell orders on exchanges. |
Issuing Entity | A demat account is issued by a depository through a Depository Participant (DP). | A trading account is provided by a SEBI-registered stock broker. |
Unique Identifier | Every demat account has a unique 16-digit number for easy identification. | Every trading account has a unique trading ID or number, depending on the stockbroker. |
Charges | Some of the fees and charges associated with demat accounts include Account Maintenance Charges (AMC) and transaction fees, among others. | Stockbrokers usually don’t levy any charges for trading accounts. However, a brokerage will be levied for trades executed through the account. |
To invest in share market, you need both Demat account and Trading account. Just like demat account, trading account is important for investing in the stock market.
With Bajaj Broking, you can open quick and paperless Demat & Trading account in less than 15 minutes.
Once, your above process is completed, you will be notified after account is successfully activated. You will receive the login details and account details through which you can login to your Demat & Trading account and start trading.
Opening of a Demat and trading account entails various fees and charges, some of them are stated below:
Theoretically, you can have a Demat account without a trading account, however, a Demat account is of no use if you do not have a trading account along with that. The purpose of a Demat account is to store shares digitally, whereas trading account enables investors to execute buy and sell orders along with other forms of trading involved in the stock market. This is the reason that all stockbrokers offer Demat and Trading account together. With banks you get the option of a 3-in-1 account, Demat, Trading and Savings.
Discount stockbrokers like Bajaj Broking, make the process convenient for you with free Demat and Trading account and a hassle-free one-stop solution for all stock market related activities.
Demat and Trading account are two integral parts of stock market investing/trading. The overall process of stock market investing cannot be carried out digitally without Demat and Trading account. A Demat account will ensure complete safety of your stocks bought, and a trading account will facilitate the transactions. Although they are two different accounts with two different purposes altogether, an investor will never really have to go through two different processes, the integration with the help of technology is so smooth and seamless that the user experience is effortless.
One such seamless platform is Bajaj Broking App offered by Bajaj Broking. The app allows you to create watchlists, set alerts, check news, place swift orders and a host of other features.
The most important feature in Bajaj Broking App which is a boon to any new investor is the option to choose curated stock baskets prepared by experts at PickRight. A new investor does not have to go through the struggle of spending hours on research, they can simply pick one of the baskets in IDEA section of Bajaj BrokingTRADE app and build a portfolio in a click.
Nowadays brokers offer you Demat & Trading Account online that you can open in a few steps. Bajaj Broking. offers Free Demat & Trading Account while offering low brokerage rates. Click here to open Demat & Trading Account today.
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