What is Demat Account and Trading Account

If you are interested in stock market investment, the first thing you will need is a Demat Account and how to open demat account.

But what is a Demat account? Is it the only account needed. What is trading account then? Let’s discuss in detail about both of them.

Demat account

Demat account is like a bank account but here instead of money transaction, the transaction of shares happens. When you buy shares, those shares are deposited in your Demat account and when you sell shares, the shares are withdrawn from your Demat account. So simply said Demat account is used to store the shares you have bought in the market.

Trading account

But only the Demat account is not sufficient to operate in the stock market. Along with Demat, one will need a trading account as well.

A trading account is like a current account which is used to buy or sell shares in the stock market. It is a link between your Demat account and the stock market. When you buy shares, trading account credit the shares into your Demat account from the market and when you sell shares it debit the shares from your Demat account and sell in the market.

Simply put, Demat account is the storage of shares and trading account is for buying or selling shares in the market.