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Difference Between Demat Account And Trading Account

Opening a Demat account is the first and foremost thing to Invest or trade in the stock market. A Demat account is used to store various investments like shares, bonds, mutual funds, government securities etc., in a dematerialised form. In contrast, a Trading account is required to buy or sell them. Demat account and Trading account look very similar, so for a beginner to understand and differentiate between them, it isn't easy.

To better understand this matter, let's take the example of Mohan, a shopkeeper who sells groceries. He buys the stock and stores it in his warehouse while selling his stocked items through his shop. He again buys more stock and keeps it in the warehouse to sell it later. Consider the warehouse the Demat account, in which you can store all the shares and securities, but in an electronic form. On the other hand, consider the shop as the Trading account where actual transactions take place.

Demat Account

Trading Account

You use it to store the purchased stocks and securities.

You use it to purchase and sell stocks and securities.

You can open it without buying any shares or securities, and it's not necessary to maintain balance in it at any point in time.

It is required to transfer the funds to and from the bank account linked with it to buy and sell various securities.

Your Demat account also protects you from those unpredictable debits and credits by providing you with the option of freezing it for the desired time length.


The Trading account keeps you aware of the markets' ups and downs as the experts' opinions get posted regularly. It even allows you to access it, no matter if the market is open or closed.

 When you possess a Demat account, you can convert the electronic form of stocks and securities into physical ones in very little time and vice versa.

Having a Trading account means having the ease and flexibility to trade through various stock exchanges and transfer the funds and equities hassle-free.  You can trade with the comfort of sitting at home or travelling because you can access the Trading account through various devices like phone, tablet, laptop or pc.

 It gives you the power to automatically get the benefits when a company or a firm distributes dividends, returns or interests, just by owning a Demat account.

On the other hand, a Trading account gives you access to all the stock exchanges throughout the country.


Fun Fact:

Did you know that you can get various loans against the securities you possess in your Demat account? Well, now you know!

At this point, having read the information given above, you are now able to differentiate between a Demat and a Trading account. But it is also worth knowing that these two accounts go hand in hand. A Trading account functions when you have a Demat account, whereas a Demat account will be of no use if you do not transact with a Trading account's help.  The Trading account plays the role of bridging the Demat account with a bank account, making Trading a smooth experience. All you need to do is have a bank account, open a Demat and Trading account, link the bank account with the Trading account and then the Trading account with the Demat account to start Trading in the stock market.


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 purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product.

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