A trading account allows a trader to buy and sell shares, which in turn acts as an interface between a demat account and the investor’s bank. The shares purchased through a trading account is credited to the trader’s demat account while the ones sold are debited from it; the proceeds earned on sales is credited to the trader’s bank account.
A demat account offers the facility to hold shares and securities in the electronic format. Through the course of online trading, the shares that are bought by the trader are held in a demat account and facilitate easy usage for them. Such an account holds all the shares, bonds, mutual duns, securities and traded funds in one place.
Types of Demat Account
Each type of demat account has its own unique feature that sets it apart from the other types of demat accounts. Let’s browse through the most common types of Demat account.
- Regular Demat Account: This type of demat account is exclusively used by the traders who live in India.
- Repatriable Demat Account: This type of demat account is deemed quite useful for the Non-Resident Indians (NRIs) as it allows them to transfer funds abroad easily. An account as this needs an associated NRE Bank account.
- Non-Repatriable Demat Account: This particular type of demat account is also designed for the Non-Resident Indians (NRIs). The main point of difference lies in the fact that this account doesn’t facilitate the transfer of funds abroad and it also has a requirement for an associated NRO Bank account.
Types of Trading Account
The basic characteristics of the four major types of trading account may be different from one another but they all serve the purpose of making the venture of trading easy and hassle-free. The below listed are the four major types of trading account.
- Equity trading account: If investors harbour the wish to trade in equities, they must have a demat account and a trading account. To trade in equities, an equity account is deemed to be sufficient.
- Commodity Trading Account: In terms of Commodity Trading, the traders trade in commodities instead of shares of companies. When an investor wants to trade in commodities, an existing equity account doesn’t suffice; an investor needs to have a separate commodity account to trade in commodities.
- Offline Trading Account: The Offline trading account is typically a traditional account that doesn’t offer the facility of internet trading. You need to avail the assistance of a skilled broker via call or through a face to face meeting, in order, to trade.
- iv. Online trading account: The Online Trading Account offers the facility of online trade. This further allows the traders to execute the process of trading from the comfort of their home or office. This type of trading account attracts lower brokerage and is deemed flexible and more convenient for the traders.
It is always recommended to opt for a reliable service provider to open a demat account and trading account, if you are looking to enjoy attractive trading features. A trustworthy institution can help you undergo the process of trading, even more flexible and easier to grasp.