Disclaimer: All investments are considered high risk. Therefore, you should consult a professional before investing in anything. This article and its content are for general information purposes only and do not constitute financial advice in any way.
The stock market brings together lakhs of investors and traders intended to buy and sell shares. It is a secure and regulated place to ensure fair pricing practices and transaction transparency. Investors can trade their shares and other financial instruments freely at zero cost. Stock markets act as the primary market for initial public offerings (IPOs) and secondary markets for listed stocks of thousands of companies. These companies’ shares are traded on the stock exchange under the defined rules stated by the regulator SEBI (Securities Exchange Board of India).
You can freely trade any listed share on the stock exchange, but you need to open trading account along with demat account to access the trading platform to connect to the stock market. SEBI-registered stockbrokers are authorised to offer online trading services via demat and trading accounts. They provide a trading platform to access multiple stock exchanges to trade eligible financial securities.
When you approach a broker and sign up with them for demat and trading accounts, they can offer few benefits to their customers. It includes a free demat account and trading account. Also, they can offer free demat account maintenance for one or two years.
In India, there are no free stocks for signing up, but investors can benefit from free demat and trading accounts, research reports, maintenance, and free delivery trades.
Let us explain what demat and trading accounts are.
What is a Demat Account?
- A demat account is an online account to hold an individual’s financial securities in the stock markets. It can hold your shares, mutual funds, futures and options, commodities, bonds, etc. Every security you buy will be reflected in your demat account. It is also important to know types of demat account besides demat account meaning.
- A demat account can be a basic account or a regular account. Depending on your investment requirements, you can choose one. Opt for a basic demat account to hold your securities worth up to Rs.2 lakhs at a point in time. If the securities’ worth is less than Rs.50,000, there will be zero annual maintenance charges. If it goes above 50,000, there will be negligible maintenance charges.
If your investment worth exceeds Rs.2 lakhs, you need to open a regular demat account. There is no limitation on holding the securities. You are free to buy as many securities of different types as you can. If you have a basic demat account and the securities worth goes above Rs.2 lakhs, the broker will change the status of your basic demat account to a regular demat account. It will charge the maintenance costs as applicable to regular demat accounts. However, it can offer you no cost account maintenance for the first year or two. Later on, you will need to pay the account maintenance cost (AMC).
What is a Trading Account?
- Numerous stocks and other securities are traded in the stock markets via stock exchanges. Investors need an online trading account with a stockbroker to buy and sell stocks. You can log in to your trading account and access the stock exchanges using the trading platform provided by the stockbroker.
- Your trading account is linked to your demat account and bank account. A buy transaction is made via the linked trading account and credited with the sell trade proceeds. Your linked demat account is credited with the purchased securities and debited by the sold securities.
- You can open a regular trading account to trade multiple securities. Whether it is equity, IPO, mutual funds, or derivatives, you can trade them at the relevant stock exchange, like BSE, NSE, MCX, etc. A trading account can be an Equity and Derivative Trading Account, commodity trading account, or margin trading account. Inform about your trading purpose to the stockbroker while opening your trading account.
You can consider a discount brokerage firm to open a demat and trading account following a hassle-free 100% digital process for free. Choose a subscription-based brokerage plan and save on trading costs.