Difference Between Demat and Trading Account
If you want to invest in the stock market, you need both a Demat account and a Trading account. Here's a simple explanation:
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| Demat Vs Trading Account |
What is a Demat Account?
- Full form: Dematerialized Account
- Purpose: To store shares in electronic format
- Acts like a digital locker for your stocks, mutual funds, bonds, etc.
What is a Trading Account?
- Used to buy and sell shares in the stock market
- Acts as a bridge between your bank and demat account
- Provided by brokers (like Zerodha, Upstox, Angel One, etc.)
How Do They Work Together?
- You place a buy order using your Trading account
- Money is debited from your Bank account
- Shares are credited to your Demat account
Visual Flowchart
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| Flow Chart |
Here is a simple image to help you understand the flow:
Summary Table
| Feature | Demat Account | Trading Account |
|---|---|---|
| Purpose | Store securities | Buy/Sell securities |
| Role | Acts like a locker | Acts like a transaction platform |
| Used For | Holding shares | Placing orders |
| Regulated By | NSDL / CDSL | SEBI via brokers |
Now that you know the difference, you're better prepared to start investing smartly!
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