IS IT POSSIBLE TO TRADE WITHOUT A TRADING ACCOUNT?

Posted by rajaram patil on September 4th, 2018

Yes, it is completely possible.

One can trade shares and securities online with the help of only a Demat Account, there is no need to have a Trading Account, however this is only possible under certain conditions. We will study about this later in this article.

For starters, anyone would suggest them to create both Trading and Demat Accounts and link them to their bank account in order to trade properly with ease. In fact, trading refers to the purchase and sale of shares and securities. In the same manner, online trading refers to trading shares and securities online and in order to trade online, one needs Trading Account as well as Demat Account.

However, as already mentioned above, it is not mandatory to have both Trading and Demat Accounts in order to trade online. One can trade only with a Demat Account. If an investor wants to hold his shares and securities and not sell them, in such a case he would only require a Demat Account. Since a Demat Account is used to hold purchased shares and securities, hence it is perfectly suited to those investors who wish to simply hold their purchased shares and securities without thinking of selling them.

There is a small condition here which needs to be fulfilled, the investor is only eligible if he applies for an Initial Public Offering (IPO) of any company. In such a case, he only needs a Demat Account with the help of which he holds these IPOs with no intention of selling them.

In simple words, with the help of an example let us understand this situation. Suppose Mr.A has applied for the IPO of a certain company and he only wishes to hold these with no wish to sell them, in this case he requires only a Demat Account, no Trading Account is needed.

With only a Demat Account, one can simply hold his shares and securities but can't sell them. If he wants to sell these, he would require a Trading Account. In other words, the need for a Trading Account arises if the need for sale of these shares and securities arises. In such a situation, the investor would first need to create a Trading Account, link it to his Demat Account, after that only he can opt for sale of these shares and securities.

Though Demat and Trading Accounts complement each other and are required for proper trading, however one can still trade only with a Demat Account. Hence, the misconception that one cannot trade only with a Demat Account or one cannot trade without a Trading Account has been busted.

The author is a share market broker & have more than 15 years of dedicated experience in trading and investing experience in a wide array of markets. He is also a visiting lecturer to various financial colleges in New Delhi.