Trading vs. Demat account – which account is needed for different investments

Trading vs. Demat account – which account is needed for different investments

Demat account and trading account: both of them are one and the same, right?


Demat account and trading account are very different and serve different purposes. Let’s explore the differences between the two.

Demat and trading account: what are they?

If you wish to invest in the stock market, you need both a demat account and a trading account. But what exactly is the difference between the two?

Well, a demat account is needed to deposit and hold your stocks when you buy them. Think of a demat account as a savings account (or a storage facility) for your stocks. Just like how you can deposit and withdraw money from your bank account, you can deposit and remove stocks from your demat account whenever you like.

On the other hand, a trading account is needed to place ‘buy’ and ‘sell’ orders in the market. A trading account is necessary to conduct any transactions in the stock market. You can register with any online stock broking firm to create an online trading account. When you register, you are provided with a unique ID that allows you to trade in the market.

How are the two accounts different?

Both demat and trading accounts are necessary to trade in stocks. However, they are quite different. Here is an example to help you identify the difference.

Imagine you want to buy a loaf of bread from your local supermarket. You pick a loaf and go to the billing counter. Here, you remove a specific sum of money from your wallet and pay the cashier.

In this example, the money stored in your wallet is similar to stocks stored in your demat account. Removing the money from the wallet and paying the cashier is like trading. For this, you need to have a trading account.

Which account is necessary for which investment?

A major question among investors is: which account do I need to conduct different investment transactions?

Well, let’s find out.

If you wish to trade in stocks, you need to have both trading and demat accounts. Here, a demat account is needed to store your stocks while your trading account is necessary for conducting the transactions.

When is only a demat account necessary?

In case of Initial Public Offerings (IPOs), only a demat account is necessary. When you apply for an IPO and you are allotted shares, the shares are transferred to your demat account.

However, this is applicable only as long as you decide to hold these shares in your account. But if you wish to sell these shares at a later date, you need to have a trading account.

When is only a trading account necessary?

If you wish to trade in instruments such as futures, options or currency, only a trading account is required. However, if you wish to trade in stocks, you require a demat account. This includes even intra-day trading when the stocks are held in your account for a single day or less.


Many investors confuse between trading account and demat account and mix up the two of them. However, the two of them are very different and both of them are required for trading in stocks. Make sure you know the difference before you start your investment journey.

Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.


Things to keep in mind while investing in property

Investing in a real estate property comes with a lot of terms and conditions. When you decide to invest in a property, you may find that the situation is completely different from what you have in mind. To avoid the confusion and legal hassles later on, there are a few things you should keep in mind when you invest in a property.1) Background of the builderReal estate deals involve large sums of money. When you buy a property, you make huge upfront payments followed by regular EMIs. So, after buying the property, you don’t want to find out that the property or the piece of land is under litigation. Experts recommend that you do an extensive background check on the builder, just to be on the safe side. Check out his past projects to verify his authenticity. 2) Ensure all documentation is properWhen you zero in on a property, you should ensure that all the required documentation for the property is in order. For instance, if you buy a residential property on the outskirts of the city, you should ensure that the land in discussion is not an agricultural land. Get a no-objection certificate (NOC) from the development authority in the city to avoid legal hassles. Similarly, ensure that you obtain the necessary approvals for the entire layout of the project from the local authorities in the city. 3) Total cost of the propertyIn order to make the deal exciting, many brokers often mention only the basic cost of a property. However, when you sign on the dotted line, you may find out that there are additional costs included such as development fees, parking charges, club charges and other statutory charges. Adding up all these additional charges can escalate your costs pretty quickly. That’s why you should always ask for the final cost of the property before you make the transaction. 4) List of banks financing the projectIt is no secret that many real estate projects in cities across the country are simply languishing because of lack of funds. The project may have kicked off very well but without enough cash to complete, banks may hesitate to finance them. That’s why, when you finalise a particular property, see which all banks are ready to fund the project. Go through the list and select the bank that offers a loan with the best rates that are suitable for you. 5) Check size of propertyIf you are investing in a residential property, remember that the ‘super built-up’ area is different from the actual size of the apartment. The super built-up area that is generally mentioned in advertisements and brochures includes common areas in the apartment like the lobby and the staircase. In reality, the carpet area of the apartment could actually be almost 30% lesser than the super built-up area. Ensure that you always go by the carpet area and not by the super built up area to avoid any surprises later.The bottom lineAs an investor, you are paying good money for a property. In return, you need to ensure that you are getting what you pay for. By keeping the above points in mind, you can make good investment decisions when you plan to buy a real estate property. Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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What is Intraday Trading?

What is Intraday Trading and How to Do It?Stock market offers numerous opportunities to traders. In fact, it is one of the daily sources of income for many people. The reason why stock market trading is popular is because it has potential to generate enormous wealth. Moreover, with the right trading strategy in place, the sky is the limit for making profits. In this article, we will learn about intraday trading meaning and its related concept.Let us first learn about what is intraday trading.What is Intraday Trading?Intraday trading or day trading is buying and selling the stocks or securities on the same day. To put it in simple words, intraday trading is squaring off the transaction on the same day it takes place. The main objective of the trader in intraday trading is to book profits on the same day and not carry any overnight position in the market.As you are now very well aware of the intraday meaning. Let us read about some tips that would help you in becoming a successful intraday trader. The tips for Intraday Trading are as follows;Intraday Trading Tips• Trade in Liquid StockSince intraday trading involves squaring off the transaction on the same day, trading in liquid stocks is recommended. Liquid stocks means the stocks that have higher volume and one can easily find buyers and sellers for these stocks. Intraday trade can be settled only when there are sufficient buyers or sellers to purchase or sell a stock. This is possible only when the trading volume is high in stock. • Follow the NewsAnother important intraday trading tip is following the news regarding stocks. Stocks which are in news are often the most volatile. Intraday traders want to trade in volatile stocks due to big price movement which gives them immense opportunities. Also it is easy to predict the price movement of the stocks that have news inflow. A positive news brings the price up whereas a negative news brings the price down. • Technical ChartsTrading on the basis of technical chart reading is always the best. Charts help in predicting the future price movement. The different patterns on the chart suggest the possible future movement in the stock price. Technical chart reading is possible only after good training. If you want to trade in stocks on the basis of chart reading, you can open a demat account with IndiaNivesh. • Prepare a Trading ListTrading in a particular script or stock gives you a better hold of those stocks. You are able to easily predict the price movement in those stocks and trade accordingly. One can prepare a trading list after detailed analysis and in-depth study of the stocks. • Resistance LevelsAnother important intraday trading tip is trading as per the resistance levels of the stocks. The resistance levels of the stocks is that level beyond which the stock does not move. A trader keeps a watch on the resistance levels of the stock and then takes a trade. When the stock breaks the resistance levels, the trader quickly takes a position in that stock and grabs the advantage of sudden price movement. • Top Gainers and Top LosersTop gaining and losing stocks of the day offer immense opportunity to traders to trade in them and make a good profit. However, the selection of stocks for trading must be done carefully. Blindly following the list of top gainers or losers for intraday trading can lead to heavy losses and wipe out your capital. • Weekly Movement of StocksThe traders often trade in stocks after seeing their weekly price movement. They take the position in the stocks after studying the weekly close of the stock price. A detailed analysis of stocks suggests which stocks are suitable for intraday trading. As you are now aware of the tips for intraday, let us have a look at how to do intraday trading.How To Do Intraday TradingThe first and foremost requirement for Intraday Trading is to open a trading and demat account. The demat account can be opened with any broker who provides these services. Selection of a broker must be done by comparing the brokerage rates and services offered by the different brokers in the market. IndiaNivesh is one such broker that provides hassle-free services at competitive rates. After opening the demat account, the beginners in the stock market must know when they can execute intraday trades and the timings of the market. Timings of the Stock MarketThe stock market in India is open from Monday to Friday. Saturday and Sunday are holidays. The stock markets opens at 9 a.m. and closes at 3.30 p.m. The intraday traders can take positions in the stocks during the above-mentioned time period. It is recommended by the experts to avoid taking any trade position during the first trading hour of the market as during that time the stock market is volatile and taking an intraday position can be a risky strategy.Let us now have a look at the benefits of intraday trading.Benefits of Intraday Trading There is no risk of taking overnight positions in intraday trading. Any adverse event after the closure of the market does not affect the intraday trader. In intraday trading, traders have higher margin in comparison to the investors. The potential of Intraday Trading to generate returns is very high. If right trades are taken, an individual can make fortune out of intraday trading. The brokers often give a discount to the intraday traders and charge lesser brokerage. The goal of the Intraday Trading is to generate higher profits. If you are a beginner in the stock market, you can start intraday trading with lower amounts initially. And when you are well equipped, you can slowly increase the trading amount. All you need to do is trade in the right stock and understand the correct entry and exit points of the stock.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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