What is a Demat Account?

A Demat account, or Dematerialized Account, is used to hold shares and securities in electronic format. Just like a bank stores your money digitally, a Demat account stores your investments securely.

Key Features of Demat Account:

• Stores shares, bonds, ETFs, mutual funds, etc.

• No physical paper certificates

• Managed by NSDL or CDSL in India

• Required for long-term holding

What is a Trading Account?

A Trading account allows you to buy or sell shares in the stock market. It acts as a bridge between your Demat account and the stock exchange (like NSE or BSE).

Key Features of Trading Account:

• Needed for performing actual trades (buy/sell)

• Linked with bank and Demat account

• Maintained by stockbrokers

• Shows market orders and execution

Demat vs Trading Account: Key Differences

Feature	Demat Account	Trading Account
Purpose	Stores securities	Executes buy/sell orders
Regulatory Body	NSDL/CDSL	SEBI/Stockbrokers
Usage	Holding shares	Buying/selling shares
Charges	AMC, Transaction fees	Brokerage fees
Required For	Investors	Traders

Who Needs Which?

• If you want to invest long-term, e.g., SIPs or stocks: You need both accounts.

• If you’re a frequent trader, you’ll use the Trading account more.

• If you’re a student or first-time investor, opening both is easy & often free.

 Open a Free Demat & Trading Account with Upstox

Start your journey today with one of India’s leading brokers.

Open Free Demat Account with Upstox

Steps to Open a Free Demat & Trading Account Online

Step 1: Visit Upstox Link

• Click here

Step 2: Enter PAN & Aadhaar

• Complete OTP verification

Step 3: Upload Documents

• PAN, Aadhaar, bank proof, signature, selfie

Step 4: E-sign via Aadhaar

Step 5: Account Activated in 24-48 hours

Benefits of Opening Demat + Trading Account Together

• Single login for both platforms

• Zero brokerage for new users (Upstox)

• Faster trade execution

• No need to visit any branch

• Works on app, web, desktop

Real-Life Use Case

Raj, a 22-year-old student, opened his free Upstox Demat account and started SIP in mutual funds and index ETFs. Over 2 years, his investment grew by 27% — and he learned financial independence.

Table Summary of Demat vs Trading

Parameter	Demat	Trading
Function	Store holdings	Buy/sell shares
Linkage	Linked with trading account	Linked with demat + bank
Example	Holding Reliance shares	Selling Reliance shares
Opening Fees	Often free	Often bundled
Need Bank Account	Yes	Yes

Mistakes to Avoid

• Thinking both accounts are same

• Not linking bank account properly

• Choosing high-brokerage plans

• Ignoring demat maintenance charges

Frequently Asked Questions (FAQs)

Q1: Can I buy shares with only a Demat account?

A: No. You also need a Trading account to execute trades.

Q2: Can I open a Demat & Trading account online?

A: Yes. Use Upstox for a completely online, paperless process.

Q3: Do students need a Demat account?

A: Yes, if they want to start investing. Choose “Best demat account for students in India” like Upstox or AngelOne.

Q4: What is the annual fee for a Demat account?

A: It varies but is often free for the first year or minimal via discount brokers.