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Can I do Intraday Trading with a Demat Account?

With the rapid advancements of technology, online trading is now available to everyone. The ease with which you can carry out trades online has attracted many new traders who want to earn quick bucks through intraday trading. There are, however, some technicalities in intraday trading that you must know for doing a seamless transaction.

Demat Or Trading Account?

Before you can answer if intraday trading with Demat is an absolute necessity or not, you must understand what a Demat account is and how it differs from a trading account.

Demat Account Trading:

A Demat or Dematerialised account is essentially a repository to hold your securities. A Demat account is a secure place where the securities you buy are held in an electronic format. In delivery trading, ownership of a Demat account is a compulsion. This is because, under this type of trading, you enjoy ownership of your purchased securities until you decide to sell them off. So, until an appropriate sale position is taken, your securities will be held within your Demat account.

Additional Read: How to trade shares online using a Demat account

Additional Read: Top Features & Benefits of a Demat Account

Trading Account:

Simply put, a trading account only keeps a record of the flow of transactions involved in buying and selling of financial securities. In intraday trades, your trading position is squared off within a single day. It means that there is no effective need for delivery of the securities being transacted in intraday trades, as transactions are only cash-based. Typically, intraday trades relate to future and options and hence there are no physical securities purchased that will be required to be held in a Dematerialised form.

Additional Read: Want to open a Trading Account Online? Here’s All You Need to Know

Demat Account vs Trading Account

Both of these accounts are closely connected, yet, play a different role in your trading process. Both of these are electronic accounts that offer immense convenience and take away the hassle of the physical aspects that the earlier trading practices involved. The table below will help you gain more clarity about the roles of each of these accounts,

Particulars

Demat Account

Trading Account

Function

A Demat account serves as a storage place for your stocks and other securities.

A Trading account allows you to buy and sell stocks and other securities.

Nature

This account will reflect the type and quantum of securities you hold.

This account will reflect the transactions that you have executed.

Your Demat and Trading accounts are linked to your bank account. These three accounts work in tandem to execute a trading transaction. For instance, let us say, you want to buy a share of company ‘X’. To initiate this transaction, you will have to add the money required to buy the share from your Bank account to Your Trading account. Your Trading account will then conduct the purchase transaction and credit the share to your Demat account.

Additional Read: Can I trade without a Demat Account?

Additional Read: Is Intraday Trading Possible Without a Demat Account?

The World of Intraday Trading

Nobody is aiming or cannot even virtually think of long-term investments through day trading. In intraday trading, unlike delivery trading, the ultimate goal is to get in and out of the market fast and crack profits within the same day. Hence, the prerequisite for intraday trading is having ownership of a trading account that can facilitate buying and selling of securities.

Intraday trading with Demat comes into the picture when you indulge in equity trading. There are no rules that say you cannot engage in regular trading if you are doing intraday trading. You can very well do both!

Additional Read: What is Intraday trading? A Beginner's Guide

Additional Read: Top Intraday Trading Tips and Ideas for New Investors

How to do Intraday Trading in ICICI Direct?

You can do Intraday Trading in ICICI Direct. It is a registered and trusted full-service broker that can help you one a Demat account or a Trading account or the 3-in-1 account that includes a Demat, Trading, and an ICICI Bank account. ICICI Direct has a proficient research wing that offers valuable insights to its customers. They offer value-based services such as Intraday Trading Tips, financial consultancy, investment advisory, trading assistance, etc.

Additional Read: How to Choose Best 3-in-1 Demat & Trading Accounts in India

After your account is open with ICICI Direct, you will be given the login credentials of your account, log in through these credentials on the ICICI Direct website or their trading app. You have an option to create a market watch list there – Create a watch list with stocks that you want to trade-in. You can keep on altering this watch list as and when you desire. You can also track the price movements and other market events through their push notifications feature. Then you have to only click on the name of the stock that you want to trade in and place your ‘Buy’ and ‘Sell’ orders.

Why choose a Demat account?

Intraday trading largely concentrates on investing in futures and options, which do not necessarily require a Demat account. For carrying out these transactions, a trading account would suffice. However, a Demat account comes with its own set of benefits which are as follows:

Zero Cost and Hassle-free:

Opening a Demat account is not a complicated process involving lots of money. You can open it conveniently with your broker or depository participant at zero cost. Many financial institutes offer the benefit of opening a Demat account, at no extra cost, along with the initiation of your trading account.

Safety:

A Demat account offers the safety and security of your stocks. At all times, you would be mentally at peace to know that your stocks are easily accessible through your Demat account.

Electronic Repository:

In today’s electronic and online transactions world, no one wants to get into the hassle of holding physical certificates of purchased securities. A Demat account acts as an electronic repository that holds your securities electronically, which eaves the way for online trading.

Portfolio Management:

A Trading account can merely tell you the volume of trades you have done over a while. A Demat account tells you the securities you hold at a particular point in time. You can track your investments better and plan your subsequent trading move efficiently with this information.

Whether or not you necessarily need a Demat account depends on the kind of trades you are involved with. Typically, an intraday trader does not indulge in Demat account trading, but in the long run, it is better to invest in opening a Demat account because of the benefits it offers.

Additional Read: How Gains from Intraday Trading are taxed

Disclaimer

ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No: 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purposes and may not be used or considered as an offer document or solicitation of an offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purposes.

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