What is the difference between Demat & Share Trading Account

There’s no denying that investment is quite important in today’s world. There are various ways in which you can invest your money. The stock market is one such arena where you can find ample opportunities for investment and as a result, earn some profit. To invest in the stock market, you need to have a Demat and a trading account. Even though these two are closely related, a Demat and a trading account have two separate purposes. Read further to know about the differences between these two accounts and learn more about trading and Demat account opening.

Demat Account:

Short for dematerialized account, a Demat account is one where all your shares are held in electronic format.This way, your shares can be maintained easily in a safe manner.

To open a Demat account, all you have to do is fill out an account opening form and submit the required documents. Then, you’ll be given a Demat account number through which you can electronically settle your trades.

Share Trading Account:

This is a crucial requirement for investment in the share market and is used to buy or sell equity shares in the stock market. Trading accounts allow you to place orders at the stock exchange without actually being present there. When a company lists its share in the stock market, you can trade for the same through your trading account with the help of a share trading app.

To open a trading account, you have to first select a broker/firm. Contact the respective authority and fill out the account opening form. Provide the KYC details and required documents. Upon account verification, you’ll get the details of your trading account, and you can start trading.

Difference between Demat and Trading Account:

  • Functionality:

A trading account is used to buy/sell securities in the stock market.

A Demat account, on the other hand, allows the investors to keep these securities in an electronic format.

  • Nature Of Account:

Trading and Demat accounts act like different types of bank accounts.

A trading account is very much like a Current bank account and links your Demat account with your bank account. It works by selling your shares post withdrawing them from your Demat account.

Demat account is a platform where you store your shares and securities and hence acts as a savings account.

  • Role played:

When you buy shares of a company, you use your trading account. Money gets debited from your bank account and shares are credited in your Demat account.

Similarly, when you sell shares through your trading account, the shares get debited from your Demat account and the money is credited into your bank account.

Both these accounts, as different as they are from one another, are vital for investing in the share market. All you need is to find the best platform for opening these accounts. Motilal Oswal provides easy trading and Demat account opening facilities and offers several perks regarding investment.

Leave a Reply