What is the difference between trading account and demat account? Explain both the terms in brief. What are the steps to open a demat account ?
What is the difference between trading account and demat account
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What is the difference between trading account and demat account? Explain both the terms in brief. What are the steps to open a demat account ?
Ridhi Mehta
The key difference between a Demat and a Trading account is that a Demat account is used to hold your securities such as your share certificates and other documents in electronic format whereas a Trading account is used for buying and selling these securities in the stock market.
Differences in trading and demat account based on different basis:-
Functionality
The primary function of the trading account is to enable buying and selling of shares on the stock markets. Based on your executed transactions, the demat account is either credited or debited for buy and sales trades, respectively. A demat account allows you to hold different types of investments electronically and if required, you may convert these into the physical form.
Nature
A trading account provides a history of your various trades over a period of time. On the other hand, a demat account gives you a summary of your holdings as on a particular point in time.
Demat is measured at a specific point in time; Trading is measured over a period of time.
Trading account captures transactions over a period of time, it is always measured over a period of time (1 month, 3 months, 1 year, etc.). Demat account, being a record of the ownership of securities, is always measured at a point in time (normally as on 31st of March of each financial year).
The role of a Demat v/s a Trading account
The key role of a demat account is to ensure the safety of investor’s shares. It allows investors to store shares in an electronic form, instead of the physical form. This account represents your current wealth in the form of shares or stocks. Whereas you need a trading account to purchase and sell shares. This account allows you to carry out trading transactions in the stock market.
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