Demat vs Trading Account: What's the Difference & Why You Need Both
If you're planning to invest in the stock market, two essential accounts you’ll come across are the Demat Account and the Trading Account. Though often used interchangeably, they serve distinct roles in your investment journey. Understanding the difference between them and why you need both can help you make smarter financial decisions.
What is a Demat Account?
A Demat Account (short for dematerialized account) is used to store your financial securities in electronic form. Whether you invest in stocks, bonds, mutual funds, or ETFs, your holdings are safely held in a Demat Account, just like a digital locker.
Key Features:
● Holds shares and other securities in electronic format
● Reduces risk of theft, forgery, or damage of physical certificates
● Regulated by depositories like NSDL and CDSL in India
● Mandatory for trading in listed securities
At Bajaj Broking, opening a Demat Account is quick, paperless, and fully online. You get instant access to your investment dashboard.
What is a Trading Account?
A Trading Account is used to buy or sell securities in the stock market. It acts as a link between your bank account and your Demat Account, allowing you to place buy/sell orders on stock exchanges like the NSE or BSE.
Key Features:
● Executes market transactions
● Linked to both your bank and Demat Account
● Provides access to real-time market data and trading platforms
● Enables investment in equities, derivatives, and more
With Bajaj Broking, you can open a Trading Account alongside your Demat Account and start trading in equities, ETFs, derivatives, and more—all from a single platform.
Demat vs Trading Account: Key Differences
| Feature | Demat Account | Trading Account |
| Purpose | Stores securities electronically | Facilitates buying and selling of securities |
| Functionality | Acts as a digital repository | Acts as a transaction interface |
| Linkage | Linked to trading & bank account | Linked to Demat & bank account |
| Regulation | Managed by NSDL/ CDSL | Registered with SEBI-licensed brokers |
Why You Need Both
To invest or trade in the stock market, both accounts work together:
● Place an order via your Trading Account
● Settlement is completed when shares are credited or debited from your Demat Account
● Funds are transferred from or to your bank account
Without a Trading Account, you can’t buy or sell. Without a Demat Account, you can’t hold what you’ve bought.
Final Thoughts
Whether you're a beginner or a seasoned investor, having both a Demat Account and a Trading Account is essential. They simplify your stock market journey by ensuring seamless execution and secure storage of your investments.
Ready to start your investing journey? Open your Demat and Trading Account with Bajaj Broking today and take your first step toward financial growth.
(The views, opinions, and claims in this article are solely those of the author’s and do not represent the editorial stance of The Assam Tribune)