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Demat Account vs Trading AccountDemat Account vs Trading Account

Difference Between Demat Account And Trading Account

When you decide to invest in stock market, your broker will inform you about the functions of a trading and a demat account. It’s also vital that you conduct your own research. Here are a few points that’ll shed light on both these concepts:


Trading account

A trading account is used for conducting trading activities related to stocks and shares. After a company lists its shares in the stock market, the investors are allowed to trade them. All this is done on an electronic system through a special account known as the trading account. Its function is quite obvious from its name. If you wish to open a trading account, then you need to register with a firm or a stock broker. Once you open this account, you are provided with a trading ID. Using this ID, you can access the shares available in the market and transact freely.


Demat account

Also known as a dematerializing account, a demat account converts all your physical certificates into electronic form. Once you begin trading, your securities deposited in the account can be either debited or credited, depending on the transaction. A typical demat account also stores bonds, ETFs, mutual funds, gold and other assets. The best feature about this account is that it remains functional even if there are no shares in it. One must also know that a demat account is a zero balance account, which means that you do not have to keep any minimum balance as securities in your account.


Steps to open a 3 in 1 Account: Savings, Trading and Demat Account with Axis Direct

1. Click here to start your online demat account opening journey.

2. Provide your name, phone number and a verified email address.

3. An OTP will be sent to your entered mobile number to verify and continue the process.

4. Enter the PAN card number and date of birth to complete the next step.

5. The next step will require you to fill up the personal details like:

a. Name

b. Permanent address

c. Residential status

d. Marital status

e. Highest education

f. Father’s and mother’s basic information

g. Financial information & information on income

h. Trading experience

6. Fill up bank details:

a. Bank name

b. Bank account number

c. IFSC code

7. Make payment (many payment modes are available)

8. Upload your documents

a. Cancelled cheque

b. Passport size photo

c. Address proof – Aadhar card/driving licence/voter ID/passport

9. E-sign your online demat account opening form.

10. You’re done! Start trading and avail great benefits like low brokerage and enjoy unlimited trading at just INR 20 per order.

Demat Account vs Trading Account

It is clear from the above definitions that trading and demat accounts are different in the way they function. So, it is recommended that one should have both these accounts in the same bank to avoid any hassles. Here are a few more points which will cover the topic of demat account vs. trading account:



1. Functions:

The differences between a demat account and a trading account lies in their function. While you use a trading account to buy or sell shares, the transaction for the same is reflected in the demat account. Also, all your securities are held in the demat account. You are given the option of changing the electronic securities into physical form by converting them into bonds.


2. Role in trading:

Both the accounts differ in their operation, but are equally important when a transaction has to be made. You buy and sell shares with your trading account and money is debited from your bank account. Simultaneously, the shares are reflected in your demat account online.


3. Cost implications:

A trading account does not need any maintenance charge apart from brokerage and statutory fees when you’re trading. Account opening charges have been removed for demat accounts, but an annual maintenance fee is charged. Also, each time you sell a share, a small amount is deducted from the account.

Certainly, these are only a few, yet significant differences between a demat account and a trading account. However, the fact that both are equally important for a smooth trading process is undeniable. You can conveniently open demat account online in 15 minutes and enjoy unlimited trading at just INR 20 per executed order!