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Know The Difference Between Demat And Trading Account

05 Jan 2023

In order to know the difference between a Demat account and a trading account, it is vital to be clear about what each of these are. When you have a bank account in a bank, this account is opened for the reason of holding your funds. Demat account opening services may also be offered to you by a bank that holds your money, but you should know what this is. Moreover, linked to a Demat account, you may have a trading account too. 

  • What is a Demat account? 

While demat account opening, you will want to know the purpose of this account. A Demat account is a storage facility that holds your securities like stocks, shares, bonds and other assets you may wish to trade with on exchanges. You may be offered a free Demat account through your bank where you already have a bank account. You may also choose to open a Demat account online, with a broker such as Motilal Oswal. The online trading account opening process requires you to have a Demat account before you start buying any shares/stocks, as a Demat account is the place to store these in electronic format. 

  • What a Trading Account is

The best account for Demat has no meaning unless you store securities in it. To do this, you have to buy securities first. Any assets can be traded on exchanges, including bonds, stocks, commodities, etc. And then stored securely in Demat accounts. Essentially, what a trading account is, is an account through which you make investments in stocks or any other assets. Through a trading account, traders and investors are able to purchase assets, or sell them, as and when they please. Profits may be directly deposited in a linked bank account. Hence, a trading account, a Demat account and a bank account can be linked for your investing needs. In case you wish to buy assets, your linked bank account is required to do so, and assets are then deposited in your Demat account. An online Demat account and an online trading account are easy to open.  

  • Trade Your Way to Success

The purpose of online trading account opening is to conduct trade, that is, to indulge in transactions that involve the buying and selling of assets, like stocks and such. Therefore, the key difference between a Demat account and a trading account is in relation to the use of each. One is used to hold your investments (Open Demat account) and one is used to transact with those investments held (trading account). With a prominent Indian broker like Motilal Oswal, you can easily open both these accounts online. Brokers are licensed as members of stock exchanges and can make trades on an investor’s behalf. So that you have a seamless trading experience, ensuring good returns, it is beneficial to open an account with a broker like Motilal Oswal. 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account | Upcoming IPO | LIC IPO

 

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