TRADING A/C
A trading account can be any investment account containing securities, cash or other holdings. Most commonly, trading account refers to a day trader’s primary account. These investors tend to buy and sell assets frequently, often within the same trading session, and their accounts are subject to special regulation as a result. The assets held in a trading account are separated from others that may be part of a long-term buy and hold strategy.
DEFINITION
The account which is prepared to determine the gross profit or gross loss of a business concern is called trading account.
DEMAT A/C
Demat account or dematerialised account is an account that holds the shares and securities of an individual in an electronic form. When an individual indulges in trading or investing in shares or securities all the transactions are done through the DA. To put it another way, just like the banks hold the money of the individuals. Similarly, the DA holds the shares and securities of the individual in the account.
DIFFERENCE BETWEEN TRADIN A/C & DEMAT A/C
1. The functionality of a Demat Vs a Trading Account
One major difference between the two accounts pertains to the functions each performs. A trading account is used for the buying and selling of the securities by means of it getting debited from your demat account and sold in the market.
A demat account, on the other hand, allows investors to keep their financial instruments in an electronic format. This also works in a way where you can change your electronic format securities into physical form as well.
2. BENEFITS of using DEMAT A/C & TRADING A/C
DEMAT A/C-
In the demat account, all the shares and securities are held in electronic form. There is no paper work at all. Thus, it reduces the risk of theft, wrong delivery of shares, etc. In addition, any company related activity like a stock split, bonus etc. are credited to the demat account.
Before demat account, trading of shares was done in lots. However, after demat account, this problem no more exists. Now the shares can be transacted in any numbers. All the transactions in the DA are automatically updated. The DA holds all the details of the account holders like address, name, time of the transaction, etc. So the companies always have details of all the transactions. The biggest benefit of demat account is that it acts like a bank and holds not only shares in the account. In fact debt instruments like bonds, etc. can be held in a single account.
TRADING A/C –
The moment you open a trading account, you get access to different kinds of stock exchanges that are there in the country. This will help you to make your investments better and stronger and of course you will have more options to explore. You can personalize your account, like set alerts and notifications as per your requirement with an online trading account. You will also enjoy the benefit of accessing your account from any media and any device.
HOW TO OPEN DEMAT A/C & TRADING A/C
OPENING DEMAT A/C
Step 1: To open a demat account; you have to approach a depository participant (DP), an agent of depository, and fill up an account opening form. The list of DPs is available in the websites of depositories: CDSL (Central Depository Services (India) Ltd) and NSDL (National Securities Depository Ltd).
Step 2: Along with the account opening form, you must enclose photocopies of some documents for proof of identity and proof of address.
Step 3: You will have to sign an agreement with DP in the depository prescribed standard format, which gives details of rights and duties of investor and DP. You are entitled to receive a copy of the agreement and schedule of charges for future reference.
Step 4: The DP will then open an account and give you the demat account number. This is also called beneficial owner identification number (BO ID). All your purchases / investments in securities will be credited to this account. If you sell your securities, your demat account will be debited.
OPENING trading a/c
Step 1: Begin with selecting a Broker or a firm.
Step 2: Make sure to make a comparative study of the brokerage rates and the services included.
Step 3: Contact the shortlisted broker for opening your account.
Step 4: Fill an account opening form that also requires you to provide KYC details. Along with your ID and address proof submit this.
Step 5: Undergo an application verification process.
Step 6: Get the details of your trading account.
Step 7: Start Trading.
