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Difference Between Demat and Trading Account | Motilal Oswal

Have you ever thought of investing in the stock market? If yes, you must also be aware of the requirements to invest money in the stock exchange. One of the most important and mandatory requirements for investors is to have a trading account and a Demat account. Even a number of novice traders have a lot of confusion about Demat accounts and trading accounts. Trading and Demat accounts may confuse you as they are typically linked accounts.

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Difference Between Demat and Trading Account | Motilal Oswal

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  1. Difference Between Dematand Trading Account About Demat and Trading Account Role of Trading Account and Demat Account

  2. About Demat and Trading Account • A Demat account is used to hold your stocks, including share certificates and other documentation, in electronic format, whilst a Trading account is used to buy and sell these assets on the stock market. This is the main difference between Demataccount and Trading account. • However providing different functions, trading accounts, and Demat accounts are closely related. In actuality, your trading account, Demat account, and bank account all closely interact to determine your actual stock market activity. In the language of the stock market, the combination of trading and a Demat account is referred to as a "2-in-1 account."

  3. Role of Trading Account and Demat Account • To store your shares in an electronic format, you need a demat account, and you need a trading account to trade on the stock market. After opening, you must have a solid understanding of the market before you can start trading. • Both Demat and trading accounts are essential while dealing on the stock market. To complete the transaction when purchasing shares of any company, you need a trading account. The purchased shares are credited to your Demat account and the money is debited from the trading account. • Similarly to this, your Demat account is debited when shares are sold. Your trading account will show the funds credited in this transaction. Therefore, having both of these accounts and linking them is essential in order to trade on the stock market.

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