The stock market is a popular investment instrument among the people. However, Demat and Trading are the two accounts that use in the stock market to make investments. In this article, we will know the difference between Demat and Trading account.
What is the difference between Demat and Trading Account?
Demat and Trading are two accounts that use in the stock market. The Difference between Demat and Trading account is that A Demat account is provided to hold the securities ( such as shares, bonds, ETFs, Mutual Fund units, etc.) in a digital form. While A Trading account is provided to Buy and sell the securities in the stock market.
If you are a beginner to stock market then you should gain basic knowledge. Let’s see, This topic in detail that What is a Demat and Trading Account?
What is a Demat Account?
A Demat Account is the short form of Dematerialized Account and It is used to hold the securities ( Such as shares, bonds, ETFs, Mutual Fund units, etc.) in a digital form. The Demat account is maintained by the central body indirectly.
The Demat account is provided to enable all the transactions related to securities digitally. Access to the Demat account requires internet identification and transaction identification. Transfers or buying of securities can then be started.
Buying and selling of securities on the account are automatically made once transactions are approved and completed.
What is a Trading Account?
A Trading Account is an Investment account and It is used to purchase and sell securities. An investor can buy and sell the securities as frequently as they want, that too within the same trading session.
Some of the key elements that differentiate a trading account from other investment accounts are – the level of trading activity, the purpose of the activity, and the risk involved in the activity.
Typically, owners of a trading account are involved in day trading and are often seen exercising long-term buy and hold approaches.