Want to know the difference between the Demat and Trading Account? Well, a Demat account holds the shares and financial securities such as ETFs, mutual funds, bonds, etc digitally whereas a trading account provides an interface to execute buying and selling of shares in the stock market.
In short, the Demat account is what you are required to hold the shares and the trading account is what you are required to trade in the shares.
Let’s take an instance, whenever we withdraw money, we keep or store our money in a locker. Or if you want to deposit your money, banks are there for depositing. So let’s use this example for share also – Can you keep shares in a store or in Bank Account. The answer is very obvious – “No“.So,
That’s where the Demat account comes into play to store our purchased shares. So, it’s more or less like your own personal store to put shares.
In simple words, a Demat account works as a bank where bought shares are deposited in or where sold shares are taken from.
Now we are done with storing what if you want to use some or all stored shares and sell those shares then we need a trading account. In short, a trading account enables traders to buy and sell shares in the stock market.
Can Demat and Trading be Same?
Some of you must wonder that we have the same account for both. It also depends on the broker for example if you have a Zerodha account, it might be possible that it works for both – Demat as well as a trading account.
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