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Trading Account
Making money in stock markets is not a gamble, but a process of systematic and scientific
investments. It is important to be aware and equipped with the fundamentals of stock markets.
The foremost step towards your trading journey is to open up a trading and demat account.
Further, it is also important to know the difference between a Demat and a trading account.
1. Select a broker of your choice by comparing the different service charges and facilities offered.
2. Fill out the account opening form. Here, you are required to provide KYC details, address proof,
and ID proof.
3. Now the authorities will verify your application.
4. You will now receive the details regarding your trading account.
5. Congratulations! You are all set to begin your journey of trading in stock markets.
However, when you open a Demat account with IIFL securities, there are no account opening chargers and
the AMC (Account Maintainance Charges) for the first year are also waived off.
Thus, whether you need to open a trading account or a Demat account or both depends on the intended
purpose.
The working of a Demat account is similar to that of a savings bank account. In a savings account, cash is
stored in an electronic form, and a Demat account holds physical securities in the same way. All Demat
accounts are associated with a depository participant like NSDL or CDSL. A Demat account is credited
when shares are bought and it is debited when the securities are sold.
Trading account functions as a reserve for funds used in trade activities. Money from your bank accounts
needs to be transferred to a trading account to be used for buying or selling securities. Any shares not
squared off during the intraday trade, go for delivery in your trading account. A trading account is debited
when shares are bought and it is credited when the securities are sold.
Role of Trading Account and Demat Account
A Demat Account is required to hold your shares in an electronic format and to trade in stock markets, you
require a trading account. Post opening, you must begin your trading journey with a thorough
understanding of the market.
While trading in the shares market, both Demat and trading accounts are crucial. When you buy the shares
of any company, you require a trading account to process the transaction. The money is debited from the
trading account and the bought shares are credited to your Demat account.
In the same way, when shares are sold, they are debited from your Demat account. The money credited in
this transaction will reflect in your trading account. Therefore, to trade in the stock market, it is crucial to
have both these accounts and link them.
Conclusion
The trading account and Demat account work in tandem with each other. For trading in equity, you must
have both these accounts. It is important to pick a broker service that is suitable to your investment needs.