The preliminary requirement of online share trading is Demat and trading accounts. Both perform different functions to help investors trade.
Unlike the previous open outcry system, investors do not need to be present physically at the stock exchange to trade in the present time. They can trade online from anywhere. The preliminary requirement of online share trading is Demat and trading accounts. Both perform different functions to help investors trade.
Demat Account is a storage facility for financial securities whereas a trading account is an interface to buy and sell the securities that you own in a demat account. This is the main difference between demat and trading account. Here are the explained functionalities and benefits of both accounts.
Functionalities of Demat Account
Demat account holds financial securities in electronic form and the transfer process of securities is very convenient and cost-effective. Whenever you sell or buy shares, it will be reflected in your Demat account. You can buy or sell even a single share of a company using your Demat account. It was not possible in the case of physical shares.
Dematerialisation & Rematerialisation of Securities
The demat account makes the conversion of the securities easy. You can dematerialize the stocks - from physical to digital form or rematerialize them - into physical form from digital form easily. You just need to give the necessary instructions to your broker (DP) for dematerialization/rematerialization after registration.
Receive Corporate benefits
When a company offers a dividend, refund, or interest and any of these corporate actions - bonus issues, right shares, or stock split to their investors, it will be automatically updated in the Demat account of the shareholders.
A Demat and trading account facilitates investing, trading, monitoring of securities all on one platform.
Functionalities of Trading Account
A trading account is used to trade financial securities in stock market online. Mainly it is an interface between buyers and sellers where they stay unknown to each other.
It is a common platform to find multiple stock exchanges to trade a variety of financial securities and commodities. All leading exchanges are just one-click away. Some of leading exchanges are the NSE, BSE, NCDEX, and Multi Commodity Exchange.
A link for seamless transactions
Trading account is linked with the savings bank account. You need not pay or receive cash in the physical form for buying or selling shares. Each and every stock trading transaction happens online.
Investing and trading are all about making the right decision on securities. The right time matters. Through the trading account, you can access platforms that also offers features like research content, financial reports. These are the tools offered with a trading account to help traders make informed trading decisions.
How to start trading online?
You need to open a demat account and trading account with a stockbroker who is a Depository Participant. Check the demat account charges that will be levied by the stockbroker for the trades. You are aware of the functionalities of both Demat and trading account.
While selecting a demat account, see that the demat account charges should be minimum and the trading account platform should be seamless to perform online share trading without any technical glitch. You should check the customer support services of the brokerage firm before opening an account.
To open an online Demat & Trading Account, keep a digital copy of your PAN card, Address Proof, Signature, Income Proof, and Bank details and upload while filling the demat online form.
Thus, an account with the right broker is going to help a lot to make investing and trading decisions. With a broker offering maximum high-tech facilities and technical support, you can experience a smooth trading process.