A Trading account is similar to a bank account. An investor or a trader can keep their funds in this particular account. The major differences are that, unlike a traditional bank account, a trading account is held by a financial institution and not a bank. It is administered by a broker or an investment manager. The purpose of such an account is to keep cash that will be used to purchase securities. This type of account not only contains cash but also securities that a trader wants to hold on to until the time that they are ready to sell. As a Trading account holder, you can employ different trading strategies in order to conduct transactions such as Intraday trading, trading on Futures and Options, etc.

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