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If you are thinking about investing in shares or other securities, you will need to open two types of accounts: a Demat account and a trading account.
So before we talk about it, we need to know what is demat account. Well, a Demat account is a type of account that is used to hold shares and other securities in electronic form. It is a safe and secure way to store your investments, and it allows you to easily buy and sell shares without having to worry about physical certificates.
A trading account is a type of account that is used to buy and sell shares and other securities. It allows you to place buy and sell orders, and it provides you with access to the stock market.
While Demat and trading accounts are both important for investing, they serve different purposes. Here is a more detailed explanation of the difference between the two accounts:
Demat Account
A Demat account is a type of account that is used to hold shares and other securities in electronic form. It is a safe and secure way to store your investments, and it allows you to easily buy and sell shares without having to worry about physical certificates. Know more about What is demat account.
When you buy shares, they are not actually delivered to you in physical form. Instead, they are credited to your Demat account. This means that you can buy and sell shares quickly and easily, without having to worry about physically delivering or receiving share certificates.
Demat accounts are also insured by the Securities and Exchange Board of India (SEBI). This means that your investments are protected in case of the failure of your broker or depository. Know more about What is demat account?
Trading Account
A trading account is a type of account that is used to buy and sell shares and other securities. It allows you to place buy and sell orders, and it provides you with access to the stock market.
When you place a buy order, you are essentially telling your broker that you want to buy a certain number of shares at a certain price. If the order is executed, the shares will be bought and credited to your trading account. Know more about What is demat account?
When you place a sell order, you are essentially telling your broker that you want to sell a certain number of shares at a certain price. If the order is executed, the shares will be sold and the proceeds will be credited to your trading account.
Trading accounts are not insured by SEBI. This means that you are responsible for any losses that you incur if your broker or depository fails.
Choosing the Right Account
If you are thinking about investing in shares or other securities, you will need to open both a Demat account and a trading account. The Demat account will store your investments, while the trading account will allow you to buy and sell them. Know more about What is demat account?
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