Any individual or an organisation in order to invest for getting returns out of it they need a trading account and a Demat account. Here is what you want to know about the Difference Between Trading Account And Demat Account
What is a DEMAT Account
Demat account is the most commonly spreading word now days we have heard and seen many broking companies like angel broking Zerodha upstox these are all stock broking companies that are providing trading and Demat account.
Demat account means a dematerialised account which holds the stocks in an electronic form, earlier the stocks we purchased from any company are in physical form and they are in paper format but now after facing several issues and in order to make the trading(buying and selling) of stocks easier and effective SEBI has introduced Demat account in 1996.
What is a Trading Account
And any individual or an organisation that wants to buy and sell securities must have a trading account and a Demat account. Trading account is used and enables the investors to buy and sell securities in the stock market earlier in the stock exchange the functioned the open outcry system where buyers and sellers meet at a place and traders used hand gestures and signals to convey the trade (buy/sell) decisions. A trading account acts as a link between Demat account and the bank account when an investor place an order the proportion of securities is credited in his/her Demat account and the amount deducted from his bank account.
Difference Between Trading Account And Demat Account
|DEMAT ACCOUNT||TRADING ACCOUNT|
|Demat account is which an account that enables the holder to store securities in an electronic form||Trading account is an account that gives the holder can do trading in securities|
|Demat account gives you the details of about the number of shares and securities that the investor is currently holding||Trading account gives you the information about the transaction that have been carried on the stock market.|
|Demat account can store the allotted shares in electronically||Trading account used for buying and selling of shares in the market and the money will be debited and credited respectively from the bank account|
|Demat account have a unique demat number for identification||Trading account will have a unique trading number for identification|
|Demat account should charge annual maintainence charges for holding and protection of shares in the electronic form||Trading account dosent have any charges|
Process of trading
The trading process should be done in two ways the very first thing is to have an interface to buy and sell shares from the stock market and then you need to hold those shares. select the stock that you are willing to invest and make your order you can also sell the stocks directly without owning as the stock market enables the Short selling
The Demat account helps to store the shares that you have made transactions from the trading account and also the allotment units from the IPO (initial public offer) after confirming your allotment you need to store the allotted share in your Demat account.
A Demat account holds the securities of an investor and it is fully protected in India the Demat account was maintained by two organisations and also known as depositors National securities depository Limited(NSDL) and Central Depository Services Limited (CDSL).
Hence we can Conclude the Difference Between Trading Account And Demat Account as An investor has a dilemma of having either of one account instead of having both the accounts and the answer is yes And investor can have a Demat account when he wants to hold the shares for a long period and having no intention to sell in the near time and even the delivery of IPO allotment needs a Demat account a trading account is not compulsory for investing IPO and in the other hand an investor can also have a trading account without Demat account and he can trade with futures and option where it has only cash and no delivery of securities.
Investors can have the advantage if quick access to their securities transactions and can do trading anywhere during market hours and the online electronic form of trading enables the investors to have fair and effective trading.
- A request to open a Demat Account with any DP can be applied for online as well.
- Visit your chosen DP’s website
- Click on ‘open Demat Account’ tab and submit the following details
- Email ID
- Mobile Number
- One-time password (OTP) that you will receive
- You will receive communication from the DP to get in touch with you for completing the above mentioned formalities and opening a Demat Account