What is the difference between a demat account and a trading account?

A demat account holds your shares and securities in electronic form, essentially functioning like a locker for the actual holdings. A trading account is what you use to place buy and sell orders on the exchange, functioning more like the transaction gateway. When you buy shares for delivery, the trading account executes the order and the shares then get credited into the demat account; when you sell, the trading account sends the sell order and shares get debited from the demat account. The two are almost always opened together as a linked pair with the same broker, but they serve genuinely different functions: one is storage, the other is execution. For intraday trades, where you never take delivery, only the trading account is really involved in the mechanics of that specific trade, since no shares move in or out of the demat account.