Hi There!!!
Before understanding the difference between a Trading account and a Demat account, kindly refer to my previous answer which explains you about a Trading and demat account and the procedures involved in opening a Trading account and a Demat account.
What is a demat account and trading account?
After understanding the basic information on Trading and the Demat account. Now lets understand how Trading and Demat account works and the difference between the Trading and demat Account.
Given trading account and demat account together serves for the two different purposes, even though both the Trading and Demat accounts are very closely interrelated.
The Bank account is linked to your Trading account.
Stock market activity is interlinked between your Trading account, Demat account and your bank account.
Both Tradiing and Demat account are popularly known as 2-in-1 account in the stock market forum.
Trading account captures your income and transactions, while Demat account holds the shares and other securities which actually captures your wealth.
When you compare with a trading account versus Demat account, the fundamental difference is Trading account captures transactions over a period of time like 1month, 3month, 1year etc. Demat account as considered being the ownership of securities with specified time period normally dated on 31st of March of every financial year.
To buy Financial product: When you plan to buy any financial products the amount will be transferred from your bank account to your Trading account and from trading account to exchange, when you buy a share on trading day the script will fall in your Demat account on T+2 day which means in simple terms if you buy a share on Monday that is on T-Day or trading day it will reflect in your demat account by Wednesday automatically.
To Sell Financial Product: First you have to make sure that you have sufficient balance of shares to sell in your Demat account the shares will be debited from your demat account on T+1 day and the amount will be credited on T+2 day.
Hope provided information helps you to get to know the difference between Trading account and Demat account.
Click on the below given link to understand in better terminology.
Tradejini
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