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difference between Demat and trading account what is trading account

Posted by : Vinay Pale on | Jun 08,2022

What is a trading account?

A trading account is an interface that allows investors to buy and sell their stocks.

Prior to online trading, the investors have to depend on stockbrokers to buy and sell stocks. However, with the growth of online trading, investors can do all these on their own. A trading account acts as a bridge between the investor’s bank and the Demat account.

A trading account always allows the investor to set a personal trading limit. An investor can buy/sell stocks, gold ETF, Forex, ETFs, and Derivatives using a trading account.

 For opening a trading account, one needs to contact a registered stockbroker.

 How to open a trading account:

 One needs to submit an account Opening Form and mandated identity and address proofs (PAN Card, Aadhaar Card, passport, etc)

  1. The second step involves the verification process. This will be carried out over the phone  or through a visit from Angel One’s representatives.
  2. Once the verification is successful, you will receive a unique ID and a password to access your account.
  3. Now link your Demat account with your online account for a seamless experience.

 

Benefits of trading account:

 

●     The trading account can easily be set-up

●     A trading account offers both telephonic and online access

●     No physical transaction is needed to do the trading process

●     A trading account shows profit and sales, helping the investor to maintain a profitable position.

 

How to choose the best trading account in India:

●     Finding a cost-effective platform that provides affordable service charges is necessary

●      A good provider that gives end-to-end services for a hassle-free experience

●     The best trading account will provide advanced technology that can be accessed from anywhere and anytime.

●     Selecting a service provider that offers reliable and efficient service

Difference between trading account and Demat account:

Trading Account

Demat Account

A trading account is an interface that helps investors to buy and sell shares in the stock market.

A Demat account is created to hold the shares and security  (bonds, ETFs, mutual fund units, etc.)

There is an annual charge that needs to be maintained to open a Trading account.

There is no annual charge that needs to be maintained to open a Demat account.

Trading Account maintains your capital market transactions over a period of time. Hence showing you the flow of transactions.

Demat Account maintains  the holding of shares and other securities at a point in time hence capturing your wealth effect at a single point of time

Trading account is measured over a period of time (1 month, 3 months, 1 year etc.)

Demat Account at a point in time (normally as on the 31st of March of each financial year)

Trading account is a place to trade your financial instruments

Demat account is a place to hold all your financial instruments

 

In conclusion, after opening an online what is trading account, the investor can buy/sell orders at his own convenience.

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