Stock exchanges facilitate online trading based on demat accounts and trading accounts. More and more investors are interested in stock investments as demat trading has made the investing process fast and convenient. Another reason is increasing investing opportunities with the rising graph of economic activities and start-up bugs in India. Retail participants are ready to be benefitted from viable stock trading at calculated risk.
Demat and trading accounts are the entry pass to enter the stock market. These accounts bring more transparency in the trades and are safe as each trading transaction is monitored by the SEBI and stock exchanges. You should know the exact working system of the two accounts. Here is the elaboration on the working system of the two. Also, you will know at what cost you can avail of the online trading facility.
Trading Account – how it works
A trading account is an online platform that connects you to the stock exchange and allows you to transact to buy/sell financial securities in a dematerialized form. It can be your shares, commodities, G-Secs, corporate bonds, government, mutual fund units, etc.
- A trading account is a single destination to access multiple stock exchanges and let you place orders for financial securities at the relevant stock exchange.
- A trading account is a link between a demat account and a bank savings account. You can fund your trades through your registered bank account and receive booked profits in it.
- It provides you with an advanced trading platform where you can make high-frequency trades. It is a primary account for traders mainly.
Demat Account – how it works
A demat account is online storage for all the financial securities you buy in the stock market. Whether it’s your shares, mutual fund, bonds, derivatives or other money market securities, you can hold them in dematerialized form with utmost safety. You can open a demat account online without holding shares or other securities beforehand. If you need to segregate your investment portfolio and trading portfolio, you create multiple demat accounts with different stock brokers.
- The main function of a demat account is to store your financial assets securely without any time limit.
- It reflects all the securities you have invested in the stock market.
- When you buy securities, it gets credited with those securities and debited with your sold securities.
- It makes you maintain all your financial assets effortlessly. Track all of them in a single place.
Demat accounts and trading accounts have eradicated the hefty paperwork involved in trading physical securities. You can open your demat and trading account online using the trading app or on the official website of the stockbroker. With a reputed stock broker, you can complete the account opening process entirely digitally.
At what cost you can avail of these accounts
Demat based trading facilitates investors with low-cost investing with reduced transaction costs on exchanges. You need to connect with a SEBI registered stockbroker offering demat account and trading services. Unlike the offline outcry trading system, online stockbrokers charge minimal brokerage for demat and trading services.
You can start your investing journey with a discount broker to save costs.
- You need not pay the demat account opening fee. Complete the online open trading account process with KYC documents for free.
- Your account maintenance charges for demat charges have been waived for the first year.
- You need not pay a transaction fee for buying trades.
- Your brokerage fee will be low at a flat brokerage rate. There are different brokerage plans for beginners, professional and experienced traders.
This way, demat and trading accounts facilitate online trading in a convenient way.