A demat account and a trading account are crucial for stock market investing but serve distinct roles. A Demat account holds your shares and securities electronically, whereas a trading account is used to execute the buying and selling of these securities.
Your trading account serves as a link between your bank account and your Demat account. When you purchase shares, funds are deducted from your bank account via the trading account, and the shares are added to your Demat account. Similarly, when you sell shares, they are withdrawn from your Demat account, and the proceeds are transferred to your bank account.
Essentially, the trading account is used for transactions, while the demat account is used for holding shares. Both are necessary for seamless stock market investing and understanding the distinction between the two is crucial for managing your investments effectively.
Comments
0 comment