Free Trading + Demat Account

What is the difference between a trading account and demat account?

Published on Friday, September 7, 2018 by


We can help you find the right broker.

Are you a day trader?

To trade in exchange offered financial instruments like stocks, derivatives and IPO etc., you need a trading account and demat account. You cannot trade with these accounts. A trading account and a demat account are different from each other and serve different purposes.

The Need for Trading and Demat Accounts

Before digitalization of stock exchanges, traders had to go to stock exchanges and verbally bid for financial instruments to trade. The certificate of their investments were transferred in hard copies. All that changed when BSE, NSE, MCX etc., adopted technology and enabled online trading. This necessitated the need for trading and demat accounts.

Online trading allows you to trade from anywhere. To facilitate online trading, a trading account is necessary. And to facilitate transfer of certificates of financial instruments, a demat account is needed.

What is a trading account?

To buy and sell stocks, derivatives etc., you need a special account which is called the trading account. A trading account is opened with a brokerage company which then gives you access to a platforms. The platforms are available on web and mobile. You can use these platforms to buy and sell financial instruments in various exchanges.

What is a demat account?

A demat account works like a bank. It is an online place where all the certificates of your holdings are stored. When you buy a financial instrument, the certificates are automatically credited to the demat account linked with your trading account and are debited when you sell the holdings.

The demat accounts are managed by central depositories in India, NSDL (National Securities Depository Limited) and CDSL (Central Depository Securities Limited). Brokerage companies only act as an intermediary between the investor and the central depository.

Difference between a Trading Account and a Demat Account

Deamt & Trading Account Comparison

Trading Account

Demat Account


Enables buying and selling of financial instruments in exchanges.

Acts a bank that stores all the certificates of holdings purchased through the linked trading account.

Managed by

Brokerage Company

Central Depository, Brokers act as an intermediary


3-in-1 and 2-in-1 accounts

Single type


No criteria, even minors can open an account

No criteria, even minors can open an account

Documents Required

PAN, Address and Identity Proof

PAN, Address and Identity Proof

Rate this article
Rating:Rated 5.0 stars

Vote Here ...

Save 60% to 90% on Brokerage Fee

We can help you save over 60% in brokerage fee.

Are you a day trader?

User Comment

No record Found

By Popular Stock Brokers
Zerodha Review   Zerodha
    The Discount Stock Broker

Free Equity Delivery Trades
Flat ₹20 Per Trade in F&O

Enquire Now

2nd largest stockbroker by the no. of clients.

5paisa Review  5paisa
    Fast Growing Discount Stock Broker

Trading at Flat ₹10 Per Trade

Instant - Online Account Opening

GET FREE Demat Account

ProStocks Reivew
    Flat Fee Discount Broker

Flat ₹15 per Trade
Lowest Transaction Charge
Lowest Stamp Duty

FREE Trading + Demat Acct

Angel Broking Review   Angel Broking
    Leading Retail Broker in India

₹0 account opening fee +
20% off on online trading

Request Instant Call Back

Beginner, seasoned investor, active trader or HNI. Get customised solutions.

₹0 account opening fee on Online Trading + Demat Acct
(₹1150 waived)

Request Call Back

Message Board

Stock Message Board

Search Mobile Apps:

Download Android App Downlaod iOS App