A Trading account is akin to a bank account, where an investor or trader can keep their funds. The major difference is that, unlike a traditional bank account, a trading account is held by a financial institution, not a bank. It is administered by a broker or an investment manager. The purpose of such an account is to keep cash used to purchase securities. This type of account contains not only cash but also securities that a trader wants to hold until ready to sell. As a Trading account holder, you can employ different trading strategies for transactions like Intraday trading, trading on Futures and Options, etc.

A Trading account can easily be confused with a demat account. However, a Trading account is used to purchase and sell shares, while a demat account is where you deposit the shares you purchase. When you want to sell your shares, you have to access them from your demat account and then complete the transaction through the Trading one.