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What is the difference between Trading and Demat account

 

What is the difference between Trading and Demat account

What is the difference between Trading and Demat account?

This is one of most common question among new traders that What is the difference between Trading and Demat account?
Let us tell you first that Both Trading and Demat account are different from each other. But both of the account is required for everyone to trade in Stock market. Both of these accounts have their own significance and roles.

What is Trading account?

Trading account in an account which is required to execute trades in stock market. You must have a Trading account to place buy or sell order transactions.

What is Demat account?

The shares which you buy or sell during your trading orders are needed to be stored somewhere. Demat account is an account where you hold your shares in an electronic form. Dematerialized account is generally known as Demat account.
Demat account acts like a bank account. The only difference is that you store your money in bank account whereas in Demat account you store your shares and securities. Demat account also ensures safety of your shareholdings.
Previously, there was a physical certificate for shareholdings and now those physical certificates have been transformed into dematerialised (Demat) electronic form. Demat account needs no physical certifications.

Why Demat Form is Better than Physical Certification Form?

Some of the many reasons that why demat form is better than physical certification form is listed below:
• Managing shareholdings in physical certification form is quite difficult.
• Number of investors and companies are increasing day by day and it was difficult to hold shares in physical forms and obviously much hectic as well.
• Not to be forgotten, as everything is going online and technology is developing it becomes mandatory to update stock exchange facilities for everyone’s convenience.

Is it mandatory to have both the Trading and Demat account to trade in stock market?

Yes, it is mandatory to have a Demat account along with a trading account. Although you can trade in intraday only with Trading account but always remember you cannot hold shares in trading account. Shareholding is possible only with a Demat account.

How does Trading and Demat account works?

1. Firstly, link your trading and demat account so that you don’t have to enter your demat account details on every transaction. Many brokers provide 2-in-1 account i.e., Trading + Demat account, you can also opt this.
2. Place a buy or sell order using your online trading account.
3. You order will get confirmed as soon as stock exchange will verify your order and account details.
4. After the order confirmation, shares will either be credited to or debited from your demat account.
• In case of buy orders, the shares will be credited to your demat account.
• If case of sell orders, the shares will be debited from your demat account.

How to open a Trading/ Demat account?

There are number of brokers in India that provides Trading and demat account opening like Zerodha, Alice Blue, Angel Broking, Fyers and many more. Nowadays, most of the brokers also provides online account opening facility as online account opening is easier than offline account opening procedure. Many brokers offer 2-in-1 (Trading + Demat) account opening so that customers can open both account at once.

Just follow the below steps to open an online trading and demat account:

1. Select a broker you wish to open your trading and demat account.
2. Check the brokerage charges and services provided by them.
3. Visit the official website of the broker.
4. Click on Open an account.
5. Enter all the required details.
6. Enter your bank account details.
7. Upload scanned copies of all required documents.
8. Submit.

Once your account opening process is complete, you will receive your Trading or Demat account Details via Email or SMS.
If you wish to open your Trading and Demat account by offline mode, you can visit the branch office of the broker or can call their customer care number for the further assistance.


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