First see the diagram:
Image: Google
Trading account:
You can see that the Trading account is the most operational account in stock market.
. It is provided by your broker.
. It works as a wallet where you can add money from your linked bank account/s.
.When you buy stocks, money is taken from this wallet.
.When you sell stocks, the money comes to the wallet.
.You can withdraw money from Trading account to your bank account.
On the other hand, Demat account is the key to the share market
.Demat account is provided by two Depositories namely NSDL an CDSL through Depository Participants or brokers.
.This is used for holding stocks electronically in a dematerialized form. Long ago people kept physical copies of shares/contracts.
.When you buy stocks for Delivery/investment, money is debited from the Trading account and the stocks are credited to the Demat account. And when you sell, the securities are debited from the Demat account and price of the sold shares is credited to the trading account.
.Mutual Fund investments can also be kept in Demat account.
.All the transactions in the stock market must carry the Demat account number.
.Demat account does not deal with money directly.
So, it is obvious that both the accounts are necessary for investments in stock market. And brokers provide both.
Since brokers are intermediaries between an investor and the stock market, one should select a broker wisely as they will charge you for providing trading and investing platforms and other services.
If you look for a good broker who offer you transparent services, good customer services and at the same time lowest brokerage, you may opt for Zerodhawhich is the largest online broker in India with more than 5 lakh clients.
This technology based broker from Bengaluru offers:
.Charges Nil brokerage for Delivery trades while only 0.01% or Rs 20/- whichever is lower per executed order for equity, F&O and currency across NSE, BSE and MCX.
.Trading platforms: Pi for desktop and Kite for web/android/ios with advanced order placing systems with the help of advanced charts and indicators.
.Provides learning resources through Varsity.
.Provides platform for investing in Mutual Fund through Coin.
.Easy money transfer through NEFT/RTGS/IMPS.
.Multilingual customer service over phone, mail, sms across the country.
.Other charges: Rs 300/- for Demat cum Trading account and Rs 200/ for Commodity while Rs 300/- (pro rata) as AMC at the end of the year.
Zerodha has the most convenient online account opening facility with Aadhaar Number.