A Demat (Dematerialized) Account is an electronic account used to hold securities such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs). It functions similar to a bank account, but instead of holding money, it holds securities in electronic form.
When you buy or sell stocks or other securities in the stock market, the transactions are recorded electronically in your Demat account. This eliminates the need for physical share certificates, making trading and investing more convenient and secure.
A Trading Account, on the other hand, is used specifically for buying and selling securities in the stock market. It acts as an intermediary between your Demat account and the stock exchange. When you place an order to buy or sell stocks, it is executed through your trading account.
In essence, a Demat account holds your securities electronically, while a Trading account facilitates the buying and selling of securities in the stock market. Both accounts are essential for participating in the stock market and managing your investment portfolio.
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