Trading Account Vs Demat Account

A trading account helps you trade shares within minutes, even seconds. A trader can transact multiple times in a single trading session depending on the market that day using a trading account.

A trading account is used to trade stocks and shares while a Demat account is used to hold or store the stocks and shares that are bought and sold. To be able to trade in shares and equities, you must have a trading as well as a Demat account.

What is a trading account?

A trading account lets you trade in shares and stocks within a short as well as a long range of time. You can indulge in intraday trading as well as inter-day trading using your trading account.

These accounts are registered with a brokerage firm and are assigned a unique ID which is used to perform transactions from this account.

A trading account can be used to trade in non-delivery transactions. If you intend to trade in options and futures in share indices, a trading account is sufficient.

These transactions do not create ownership and the profits and losses can be directed credited to and debited from a trading account. Similarly, you can trade in currencies solely with a trading account.

But according to SEBI regulations, you cannot hold stocks or equities that create ownership in your trading account and any trade inequities requires you to hold a Demat account.

What is a Demat account?

A Demat account is used to hold or store shares and equities that are bought or sold. You can only hold assets owned by you in your Demat account and hence, futures and options, that create no ownership and are contract-based can only be traded and stored in a trading account.

But, while a trading account can be used to produce a non-delivery transaction where you buy and sell within a single day and hence the net delivery remains zero, to trade in equities you have to necessarily hold a Demat account.

A Demat account allows you to hold equities and stocks that create ownership and these may be traded using a trading account. To be able to do this, both these accounts should be linked to each other.

What is the difference?

A Demat account serves as a wallet or a bank that you use to store your assets and a trading account is a medium to access that wallet to perform a transaction.

You may hold just a trading account if you intend to trade just in futures and options. All the F&O transactions are credited or debited in cash and do not create ownership. Hence there is no need to create a Demat account.

On the other hand, if you are planning to trade in stocks and equities, you need to open a Demat account. The same is true of any other transactions that may create ownership. A Demat account may incur annual maintenance charges. A trading account doesn’t incur any such charges and is easier to maintain.

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It is, therefore, important to learn both the pros and cons of intraday trading to get a better idea of how this market works and how exactly you can grow your money. In this post, we will walk you through a few advantages and disadvantages of intraday trading. So, keep reading to learn more.

• Beware of fixed/guaranteed/regular returns/ capital protection schemes. Brokers or their authorized persons or any of their associates are not authorized to offer fixed/guaranteed/regular returns/ capital protection on your investment or authorized to enter into any loan agreement with you to pay interest on the funds offered by you. Please note that in case of default of a member claim for funds or securities given to the broker under any arrangement/ agreement of indicative return will not be accepted by the relevant Committee of the Exchange as per the approved norms.
• Ensure that pay-out of funds/securities is received in your account within 1 working day from the date of pay-out.
• Be careful while executing the PoA (Power of Attorney) – specify all the rights that the stock broker can exercise and timeframe for which PoA is valid. It may be noted that PoA is not a mandatory requirement as per SEBI / Exchanges.
• Register for online applications viz Speed-e and Easiest provided by Depositories for online delivery of securities as an alternative to PoA.

• Do not keep funds idle with the Stock Broker. Please note that your stock broker has to return the credit balance lying with them, within three working days in case you have not done any transaction within last 30 calendar days. Please note that in case of default of a Member, claim for funds and securities, without any transaction on the exchange will not be accepted by the relevant Committee of the Exchange as per the approved norms.

• Check the frequency of accounts settlement opted for. If you have opted for running account, please ensure that your broker settles your account and, in any case, not later than once in 90 days (or 30 days if you have opted for 30 days settlement). In case of declaration of trading member as defaulter, the claims of clients against such defaulter member would be subject to norms for eligibility of claims for compensation from IPF to the clients of the defaulter member. These norms are available on Exchange website at following link: NSE, MCX

• Brokers are not permitted to accept transfer of securities as margin. Securities offered as margin/ collateral MUST remain in the account of the client and can be pledged to the broker only by way of ‘margin pledge’, created in the Depository system. Clients are not permitted to place any securities with the broker or associate of the broker or authorized person of the broker for any reason. Broker can take securities belonging to clients only for settlement of securities sold by the client.

• Always keep your contact details viz. Mobile number/Email ID updated with the stock broker. Email and mobile number is mandatory and you must provide the same to your broker for updation in Exchange records. You must immediately take up the matter with Stock Broker/Exchange if you are not receiving the messages from Exchange/Depositories regularly.

• Don’t ignore any emails/SMSs received from the Exchange for trades done by you. Verify the same with the Contract notes/Statement of accounts received from your broker and report discrepancy, if any, to your broker in writing immediately and if the Stock Broker does not respond, please take this up with the Exchange/Depositories forthwith.

• Check messages sent by Exchanges on a weekly basis regarding funds and securities balances reported by the trading member, compare it with the weekly statement of account sent by broker and immediately raise a concern to the exchange if you notice a discrepancy.

• Please do not transfer funds, for the purposes of trading to anyone, including an authorized person or an associate of the broker, other than a SEBI registered Stock broker.

• Do not deal with unregistered intermediaries (who are not registered with SEBI/Exchanges).

Names and contact details of all Key Managerial Personnel including Compliance Officer

Sr. No.Name of the IndividualDesignationContact NumbersEmail Id
1 Charanpreet GillCEO/
2 Charanpreet GillWhole Time
3 Charanpreet GillCompliance
4Manpriya GillDesignated
5Kewal GillDesignated

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