Now we are going to talk about what is the difference between trading & demat account. I know if you are new in the stock market & just started researching to understand the jargons that used in the stock market. If you ever talked with the person who trading or investing in the stock market & you said him that you also want to start investing in the Stock Market. Then he said you in order to investing in stock market you have required trading & demat account. On that time didn’t know what is the meaning of the trading & demat account. But don’t worry I’m here to explain Difference between trading & demat account in simple words. Which helps you to understand this thing better.
When I’m new in this business on that time also don’t know the difference between in trading & Demat account. So let’s start the explanation.
Trading account: In order to understand the proper meaning of the trading account. First you have to understand the meaning of Trading. So basically buy or selling something like Jewelry, Furniture, Vegetables or even stocks is called Trade. So even when you bought some products from shopkeeper then you are actually Trading with him. So in simple line buying or selling anything is called trading.
So in stock market we are actually just buying or selling the shares in order to make a profit with them. So in order to Trade (buying & selling) in the stock market the account that you required is called Trading Account. So without Trading Account you will not able to place any trade (buying & selling). So opening a Trading is mandatory in order to start Trading (buying & selling) of shares in stock market.
Demat Account: As I told you in order to buy & sell you required Trading account. So now suppose that you just bought a 10 stocks of reliance industries & you want to hold that stocks for 1 year. So now where these 10 stocks going?. Because in now days trading is done through Internet & everything goes digital. So basically in order to hold these 10 stocks the account that you required is called Demat Account. So Demat account is just like a your bank account. In bank account you hold your money & in demat account you hold your shares that you bought via your trading account.
Difference b/w Trading & Demat Account:
- If you want to do day trading (Holding stocks till the market close for same day) then you only required trading account. because demat account is only required when you want to take delivery of the stocks( Holding stocks more than one day).
- In Futures & Options trading you only required trading account. In Futures & Options you can’t take delivery of them because futures & Options have there own monthly expiry & they are trading in monthly contract.
- If you want to hold shares for long or short term then demat account is required.
- In simple words without trading account you will not able to purchase shares & without demat account you will not able to hold shares for more than one day.
So basically if you are new in stock market & you want to open a Trading & Demat account than I recommend you to open a account with Zerodha. Zerodha is a Number one discount broker in India. They have great trading platforms for Desktop, Mobile & Web browser. They also charges you very less brokerage compare to others. You don’t have to pay any brokerage if you take delivery of the stocks. 0.01% brokerage for day Trading. You also don’t have to pay more than 20 Rupees no matter how big your trade is. I also using Zerodha for my all Trading needs. I never suggests wrong things to anyone. You can also read my Zerodha review on my another blog. You can also read my this article how did high brokerage spoil your profits & deeper your losses.
If you want to open a account with Zerodha all you have to do is click on this link fill your details ( Email address, Mobile number, Your Name) & than click on the call me back button. In within 24 hours they call you back & they informed you all the documents required to open a Trading & Demat account. If you have any question than you can comment on down below or asked them when they call you back.
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