Demat and Trading Accounts

To know you have money in your bank, you look at your bank account statement or cheque book.
Where do you look to know that you have shares?
You can check your Demat account to see your purchased shares.
The only difference between your bank account and your Demat account is that you can’t withdraw your shares in a physical form.
Your shares are always in electronic form, also called the Dematerialized form, in your Demat account.

A Demat account is a place where you hold your shares
In your Demat account, your shares are held in an electronic form
You can check your average buy price, current value and gains from your share in your Demat account
Your Demat account is connected to your trading account and your bank account
You cannot purchase shares without a trading account

A trading account is the storage space where you can keep the money to invest through your Demat account
It is just like a payment wallet for your Demat account
Just like any other wallet, you can transfer money into your trading account through a card, UPI, or internet banking
You can use your trading account money to pay for the purchase of shares
Similarly, when you sell the shares, your investment amount is transferred to your trading account
You can either use that money to buy shares or transfer them back to your bank account
You can transfer money back and forth to your trading account at applicable minor charges
You cannot pay for buying shares without a trading account

Learn about different market types in the next chapter