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Types of Demat Account & Trading Account

Date: Sep 19, 2022 | Time: 11:41:00 AM | Author: Editor News

Planning to invest in Indian stock markets? Then this is the right time to open your Demat account. They are proved to be the safest option for investors to hold securities and are shared in an electronic format. So the chances of any loss of asset and theft are close to zero. Of late, maintaining such an account is made mandatory to trade in Indian stock markets. The good part of this electronic format is that all those hassles related to physical shares could be removed. Forget about all the forgery, theft, and damage that would have occurred to physical certificates, because you have a Demat account to your relief.

Meanwhile, something as innovative as a trading account is the next big thing to be talked about. Moreover, in that very trading session, you could buy and sell assets when you wish for.

Now, let us know and understand more about both Demat accounts and trading accounts and how they have impacted data storage in stock markets.

What is a Demat account?

Also referred to dematerialised account, this account could be deemed as a one-stop place to record the track of all sorts of investments such as bonds, shares, mutual funds and exchange-traded funds that any individual. In India, these accounts are under the control of Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL). Furthermore, investors do not have to be worried about spending extra charges for market stamps and there will not be any restrictions on selling shares.

Types of Demat account

Regular Demar Account: These sorts of Demat accounts are used by the citizens of India. These accounts would make the trading operations look simpler. With them, you could make all those editing processes fast. And the good part is, without paying an extra penny, you could transfer your holdings of regular Demat account to a different institution. With the help of depository participants and stockbrokers, these accounts are granted. The charges of the Demat account would wholly depend on the volume held in and on the type subscribed. Also, it would be functioning as per the terms and conditions put aside by the depository and depository participant.

RepatribleDemat Account: An investor outside India could plan to invest in equity markets. If the investors possess a Non-Resident External NRE bank account, transfer of funds abroad is permitted in these sorts of Demat accounts. Such demats are a great boon for the NRIs because the repatriation of funds will not be feasible with a regular Demat account.

Non - RepatribleDemat Account: The transfer of funds is not possible in non-repatriableDemat accounts, though, in repatriableDemat accounts, investors could transfer wealth abroad. Therefore, these Demat accounts are exclusively made available for NRIs.

What is referred to as a trading account?

The primary account of a day trader is considered a trading account and is provided by a stockbroker. Through these accounts, investors could buy and sell assets which are usually done within that very trading session. What makes these accounts crucial is that they link the bank of the investor and the Demat account.

How is a Demat account different from a trading account?

In the Demat account, the shares and securities such as ETFs, bonds and mutual fund units can be seen in digital mode. On the other hand, the trading account, this very account offers the interface to buy and sell shares in the stock market.

Types of Trading Accounts:

Before venturing into this vast world of trading, investors should know about the diverse types of trading accounts to make them big in the industry. To trade in the Indian stock market, investors must possess such an account.

Given below are the types of trading accounts that one needs to know about.

Commodity trading Account: As the very name implies these sorts of accounts are associated with the commodity market. Through commodity trading accounts, investors could buy or sell primary economic products such as agricultural products, oil, gold and others. It would be regulated by SEBI (Security Exchange Board of India). Moreover, before setting out for commodity trading, investors should open a commodity trading account. It could be opened with any recognised commodity exchange in India or a registered commodity.

Cash Account: If the investor is opening a cash trading account, borrowing funds from the brokers will not be made possible. In addition to that, they will be obliged to pay the entire amount at a go, whenever buying any securities.

Offline and Online trading account: When a trader is doing offline trading, they should visit the office of the broker and physically place that order. Other than that, one could place that order after calling any reliable stockbroker. The trading account opened for such transactions is referred to as an offline trading account. Meanwhile, the transactions of online trading accounts are done with the help of trading software. It could be a mobile trading app or the ones built by your stockbroking firm.

Margin Account: Unlike sole funding, when investors are maintaining such margin accounts, they buy more securities and could borrow from the broker. Nevertheless, when the value of securities is lessened, investors will lose money when maintaining a margin trading account. Also, the securities could be sold by brokers.

Share trading account: Through these trading accounts, merely shares could be bought and sold. Moreover, investors could execute varied types of share trades.

2-in-1 account & 3-in-1 trading account: Whilst shares are purchased, the process of transferring shares to the Demat account will be faster and hassle-free in a 2-in-1 trading account. On the other hand, 3-in-1 trading is yet another type of trading account with is of a more advanced level, as it provides integrated demat, trading and bank account. You could have a seamless transfer of both shares and money and most often opened with banks.

Equity Trading Account: Traders could trade in futures, stocks and options trading through these kinds of accounts. With the help of an existing trading account, traders could deal currency derivatives. Furthermore, he would be requiring a Demat account to store the stocks' delivery or to subscribe for an Initial Public Offering (IPO).   

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