What is the difference between a Demat and a Trading Account?


Approaching the stock market is convenient and hassle-free in the online trading system. Traditionally, in the offline trading system, when individuals wanted to invest money in the stock market, they had to call their stockbrokers or visit them and ask to place a request to buy securities. 

The broker would then let them know the share price and place the order on the stock exchange after getting confirmation from the investor. Investors were issued security certificates they needed to store with utmost safety to save any damage or theft. Indeed, it seems a daunting process. 

Now you need just a Demat account and trading account to trade financial assets. You need not go to the broker's office to place a trade order. Both are different accounts, but they allow you to trade from the comfort of your place. You are assigned unique IDs for both accounts. 

A Demat account is necessary if an individual wants to trade in equities or stocks. Intraday traders, currency traders, and future & options (F&O) traders can skip it as they do not get delivery of the securities. Sometimes, when day trades turn into delivery traders, day traders need a Demat account. If you intend to trade only in F&O, you need a trading account only. 

Read also: What Is The Procedure To Convert Shares To Demat Account

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