Demat and Trading Accounts are very much interconnected and interdependent on each other. Although these accounts can be used separately, they do not serve a great purpose when used solely.
So what are the differences between Trading Account and Demat Account? Can you trade without a Demat account? And how they are interdependent is what you will learn in this article today!
Let’s get started!
Content:
- What is Demat and Trading Account?
- How are Trading and Demat accounts interdependent on one another?
- Trading without Demat Account
- Demat vs Trading Account
- How to open a Demat & Trading Account Online via Aliceblue?
- How to open a Demat & Trading Account Offline via Aliceblue?
- Quick Summary
- FAQ (Frequently Asked Questions)
What is Demat and Trading Account?
To start with the difference between Demat and Trading Account, let’s understand what they mean individually!!!
The full form of Demat is Dematerialized Account. A Demat Account allows you to store financial products like Shares, Debentures, Bonds, and ETFs bought in the stock market electronically. Simply put, a Demat Account acts like a Bank Locker that stores your shares safely.
On the other hand, a Trading Account helps you buy and sell Shares, ETFs, and Other Financial Instruments listed on the stock market.
When you open a trading account with a broker, you will be provided trading software using which you can place buy and sell orders. Or you can also place orders via a call with the broker.
Learn everything about Demat and Trading Accounts. And also, look out for Demat Vs Trading Account as you read through the article.
How are Demat and Trading accounts interdependent on one another?
Let’s understand this with an example:
- Assume on a fine Monday, you decide to buy 100 shares of SBI Bank.
- To buy these shares you need a trading account using which you will place the buy order.
- After placing the order, if you want to hold the shares for more than a day, you need a Demat account to store those shares.
So that’s how Demat and Trading Accounts are interconnected with each other.
Now you might ask, is it compulsory to have both Demat and Trading Accounts? Well, the answer is No.
Why? Find out below!
Trading without Demat Account
As you have already learned, a Demat account is needed only if you want to hold the shares. But if you are trading in Equity and Currency Future and Options you do not necessarily need a Demat account. Equity and Currency futures and options contracts expire weekly or monthly and are completely cash-settled not resulting in delivery.
You might be wondering why intraday trading in equities is not possible without a demat account, although the shares are bought and sold on the same day and do not result in delivery.
Well, that’s because the SEBI Regulations restrict you from doing so. Hence, you compulsorily need to open a Demat account if you are doing intraday trading in equities.
Also having a trading account only can help you avoid various charges like Annual Maintenance etc.
Demat vs Trading Account
- The Demat Account helps you store financial instruments like Shares, ETFs, Mutual Funds, etc. while a trading account helps you buy them.
- Annual maintenance charges are applicable for a Demat Account whereas such charges are not applicable for a Trading Account.
- While a Demat Account acts like a safe locker that helps you store shares safely, a Trading Account acts like an e-commerce platform where you can simply log in and start buying financial instruments.
How to open Demat and Trading Account Online via Aliceblue?
Generally, both trading and demat accounts are opened simultaneously. But if you wish to trade only in Equity and Currency Futures & Options, you can open a trading account only.
Here’s how you open a trading & demat account:
If your Mobile no is linked with Aadhar, you can open the Trading & Demat Account online.
Follow the simple process given below:
- First, visit our website and click on Open an Account.
- Fill in your Name, Email, Mobile Number, and State and click on Open an Account.
- Upload account opening documents.
- Provide an IPV (In-person verification) by showing your PAN towards the camera along with your face.
- E-sign the documents by verifying your Aadhaar with Mobile Number.
- Your account will be activated within 24 hours.
If your Mobile Number is not linked with Aadhar, you need to open the Trading and Demat Account Offline.
How to open Demat and Trading Account Offline via Aliceblue?
- Download the KYC form ABFSPL.
- Take a printout and fill up all the details. You can call us on (+91 8061575500, +91 8045490850) if you need help with filling out the account opening form.
- Attach a self-attested copy of the account opening documents.
- Sign the KYC form and send the hard copy to Aliceblue Corporate office address.
Check out the detailed step-by-step process of how to open a Demat and Trading account online and offline. Also, learn the documents required, the charges involved, and the after-account opening process in this article.
Quick Summary
- The full form of Demat is Dematerialized Account. A Demat Account allows you to store financial products like Shares, Debentures, Bonds, ETFs bought in the stock market electronically.
- A Trading Account helps you buy and sell Shares, ETFs, and Other Financial Instruments listed on the stock market.
- Annual maintenance charges are applicable for a Demat Account whereas such charges are not applicable for a Trading Account.
- A Demat Account acts like a safe locker that helps you store shares safely, a Trading Account acts like an e-commerce platform where you can simply log in and start buying financial instruments.
FAQ (Frequently Asked Questions)
1. Which Account is required for Share Trading?
Although a Trading Account helps you buy and sell Shares, ETFs, and Other Financial Instruments listed on the stock market, you need a Demat Account to hold and store the shares. As per SEBI Regulations, you need to open a Demat Account along with a Trading Account for Intraday Tradings.
2. Is Demat Account different from Trading Account?
Demat and Trading Accounts are very much interconnected and interdependent on each other. A Trading Account helps you buy and sell Shares, and Other Financial Instruments listed on the stock market while a Demat Account acts like a Bank Locker that stores your shares safely.
We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market, and hence we bring you the important topics and areas that you should know:
