Understanding Demat and Trading account relationship

Some of the beginners to online stock trading do not understand relationship between Share Trading account and Demat Account . In this short article lets see the relationship between Demat account , Trading Account and your Bank Account . We will also see how many trading or Demat account you can have in total .

Work Flow

Below is a short chart where I have tried to give the flow when you buy a share . click to Enlarge


Demat Account : Account where your Shares are stored in electronic form .

Trading Account : An account which is used to place orders for Buying and Selling of shares .

So Trading account is an interface between your Bank account and your Demat account , when you buy something , Trading account takes money from your Bank Account (Its already taken from your Bank account and saved in Trading account) and buys shares and stores it in your Demat account . When you Sell something , Your trading account takes back the shares from your Demat account and Sells them in Stock Market and get back the money and that goes back to your Bank account (actually you manually transfer it to Bank account from Trading account most of the times .

Question : Does any one know maximum how many demat account can one open ?

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102 CommentsAdd Comment

  1. Anonymous

    No limit on number of DMAT account by a person.

    Personally I had 4 DMat account out of which 3 are active at present (as far as I know)
    Obviously I am paying for 1, rest are bouncers

    • Jayan

      I have 3 Dmat accounts, out of three only one has shares and ncd’s under india infoline, others have no shares not operating nothing, dp holding companies always sending info i have pending amc needs to pay. How can i solve this issue without paying amc, i have no shares holding. Thank You

  2. Excel Matic

    @Anonymous: There is a limit on number of Demat accounts you can have.

    Though I am not sure about this number, but have got to know from my broker that an individual can have maximum of 5 demat accounts on his name.

    @Others: I agree with the author's view that many people do not understand the difference between the trading account and the demat account. With this, people are do not research much about which broker should they choose or what parameters should they look at other than brokerage to select a broker.

    I have expressed some of my views here, probably they might help. Link – http://blog-bizzare.blogspot.com/2009/09/which-broker-to-hire-for-new-trading.html

  3. Puneet

    You can have as many demat accounts as you wish to…
    The only catch is, legally, you cannot apply for IPO from all the accounts. One application per PAN holder is allowed.

  4. Maurya

    Theoretical knowledge is good, but doubts remain on the practical side.

    1. Examples of demat and trading accounts?

    2. What do we get when we open an account at, say, reliance money? Both the accounts, or just one of these?

    3. Can we mix and match e.g. reliance money trading account with kotak demat account? Or is demat account not associated with any broker but directly held with NSDL?

    4. For which account do we pay the various fees (per transaction, yearly etc.) ? Can we hold one and close the other e.g. if I do not want to trade for a while, can I close trading account but keep the demat account open? Will it save me significantly on annual fees?

    5. Is it possible to not hold demat account but still trade? Can I get shares in paper form?

  5. Anonymous

    @maurya

    U can mix any trading account with Dmat account, in such cases you can't do online trading (Practically), as Dmat will not be linked with online trading a/c.
    Whenever you sell, you need to fill Depository receipt and give it to your trading account partner.
    This is the way people uses in smaller cities, where Dmat-online trading still not SO HOT.

    AS such trading account doesnt have any fee associated with them, only charge might be First time account opening and Software Charge. They earn via Brokerage
    DMAT account has Annual maintance charge, custody charge etc

    Now it is impossible to trade without dmat account.
    Shares on Paper –(transfer)—> DMAT is possible
    DMAT —-> paper is impossible

  6. Anonymous

    Good reaad.. quite detailed infor… so even if i take any demat account the system or the online trading firm would work in the similar manner.. ?? be it rmoney / icici / sharekhan/

  7. Anonymous

    yeah, no limit to the number of article.. been using two for quite some like reliance money and 5paisa.. and faced no troubles..

  8. Mukul

    You continue to contribute to the investment quotient of a common man who is tentative to enter the big, bad world of stocks, trading and making money.
    Keep it up!!!

  9. lavanya

    manish
    i have been following this site for 2 months. quite informative. thank u.
    is there any ‘the best’ stock broking agency? or are all pretty much the same?i am planning to open a trading account and would like the information.

  10. caribou

    Hi Manish,
    Is it possible to buy and sell mutual fund through Demat Account? If possible, is it easy?
    Please tell me which demat account (eg. SBI demat, Axis Bank demat, etc) can be used to buy and sell mutual fund?

  11. vijay sharma

    Can I associate more than one trading account to my reliance dmat account?
    2.Does DMat account provideer charge something on every brockrage or only annual charges?

  12. Purushottam

    One query v imp pls.

    I have lost heavily in shares ( put my story up earlier if anyone remembers lost 9 lakhs till now )

    I have one account with ICICI savings+demat+ trading
    I dont want to trade any more as I have a bad habit and I fall in the trap
    Following are my queries pls answer –

    1) Can i close my ICICI direct trading account while the demat account remains open ?
    2) I have couple of infra bonds of 5 year lock in and mutul funds worth 1 lakh and share worth 10k . What will happen to them if i close the trading account ?
    Can they remain in demat ?
    3) In future i wish to only buy or sell mutual funds or buy infra bonds for tax saving . Is it possible without trading account ? only with demat account by filling slips etc ?

    Pls answer if anyone knows about this

  13. Pradeep

    Hai ,

    I just joined a company for commodity share trading,they told me to create a Demat account,will it be chargeable for me,will i need to submit my bank account to new demat account
    can i have your contact number to contact you,

  14. ashish

    Hi Manish.i am new to this world of numbers.thought of investing some amount in buying shares.friend of mine suggessted to open account with icicidirect.do ineed to open 3in 1account.which bank is better for opening these account.how much do they charge?

  15. Prashant

    This link is so helpful.
    I am planning to invest some money in bse, but I’m waiting for my pan card. (I’ve applied for it on 24th Sep and I’ll get it in couple of days).
    But Sir, I have a query. While opening an demat account, will I have to deposit some money in demat account ( like minimum balance or something)
    I’m asking this question because while looking for brokerage companies I got this “After registration, you will be required to deposit a certain amount of initial margin deposit with them. The deposit can be of any amount, but it should not be less than Rupees Five Thousand”.
    The above statement was for 5paisa comp….
    Also I’m looking forward to trade with Angel Broking. Is this a good move, please reply.
    Thank you

  16. VijayKumar

    Hi Manish ,

    Please advise me , i am very new to this world of stocks, I would like to invest in Gold like SBI GOLD ETF etc….Please tell me how the price of the GOLD ETF will change (like as per the GOLD rates or like shares)In gold the price changes day by day.What i need to have to invest in the GOLD ETF of any company. How this investment will work . Advise me clearly.

    • Gold ETF are just like stocks, people buy and sell as per their assumptions on the market price and the real market price, so it will move as per the gold price only, you need to have a demat account to buy and sell gold ETF .

  17. Amit Pendse

    Hi,
    I have a trading account in sharekhan. But where do i find the trading account number on its site? I can only see dmat account number on it. Its been years since I have used sharekhan so I dont have any documents or letters from sharekhan where I can find it. Please help me its urgent.

    Thanks
    Amit Pendse

  18. Vishal

    I m new to market. I want to open demat acc. with SBI. I want to buy n sell shares by my own (through online) , not by any broker.
    Is it necessary to hav trading acc.?
    Wat is demat and trading acc?

  19. GOLDY

    Hi Manish
    I have a trading account with angel broking and demat a/c with pnb . i would like to sell my shares what is the actula process angel says i need share in our pool only then we can sell and pnb says first you have to sell your holding and mention the statement no on delivery slip then we foreword.i am confused in between this two company we cant sell my holding shares please suggest the actual process w. Please help me its urgent.i have only one demat a/c with PNB

  20. pradeep

    I am a beginner… help me out step by step.. i have a demat account with hdfc bank.. what shud i do to start buying and selling shares.. also. do i need a trading account also.

  21. Manoj

    Hi Manish,

    Thanks for your posts. Its very informative.

    I’ve a query. I’m currently holding a trading and demat account. Demat account have a MF and Infra bond. As now days I’m not trading, I want to close these accounts.

    As I contact my DP, they mentioned that I can not materialize MF and Infra bonds. So I can not close my demat account. I’m feeling that I’m wasting money on annual charges. Any way out?

    Thanks.

  22. Sunetra Sen

    My question is that if I close my trading account with brokerage company #1 then will it impact my demat account in any way? I have used the same demat account to also allocated Infra bonds in demat format.

    Also, if I open a trading account with brokerage company #2, can I link their trading account to my existing demat account?

    Please can you help me here?

  23. sir, i want to start sell, purchase share and trading, is both are different and should it need different account to be open for both purpose, Open a demarcate account with icici bank is good or not, if not then tell me good company.

  24. Naresh

    I like to buy/sell shares from my Citi demat account using a trading account with HDFC/IIFL. Is it technically feasible?

  25. Raaj sekhar

    hai sir, i have been observing sensex n nifty for last 2years.. now im intersted about stock market.. im new to this world.. im sbi account holder.. sir, which precautions will make me in profit zone?? thans in advance

  26. Anand

    Hi Manish,

    Really liked your post. Since, I am new to this, just want to know which bank/broker will be the best to open trading/demat account? Also, could you please let me know the steps involved in it?

    • Yes, you can do that .. I prefer ICICI direct. would you like our help in getting your ICICI demat opened . You can even invest in everything from there like shares, mutual funds etc ? We can help you on that, let me know

      Manish

  27. Hello sir
    I have demat a/c in aditya birla money I had lost my money
    And I would like to close the demat a/c.If I close the demat a/c can I review
    The cancelled cheques and any documents from them.
    Please reply

  28. Md.Istakhar Alam

    I have open demat account in sbi but still in confusion that either bank had open or not secondly till know i hav’nt use demat account while i have already net banking. Therefore how i know about that

  29. Deepa

    Hi
    I am very new to the market and looking for both intraday and delivery trading including trading in commodities as well. Could anyone help me in deciding the best and cheap broker ..bank or dp to open a trading and demat account.
    I am getting confused after reading the reviews and unable to decide anything. Is it good to have 3-1 account for beginners in same bank or other way around I can choose..
    Deepa

  30. Happyinvest007

    Hi Manish

    It was a nice article and came to know when I started searching for basic details on investment on stocks. Yes, I have now decided to start investing in Stock Market after my steady investment in mutual fund.

    Can you please hele here with my simple questions:

    1) I have saving account with ICICI bank and would like to open DMAT and trading account with them. Am I eligible for 3-in-1 account benifits, if any?

    2) I want to open DMAT and trading account with defferent DP other than ICICI (saving account with ICICI), is it practically feasible? Are there any constraint or inefficiency around this option.

    Thanks

  31. santosh

    Hello sir
    I have demat, trading a/c in aditya birla money I had lost my money
    And I would like to close the demat a/c. can i close my account. thank you.

  32. I read all comments,
    Meh yea jaynna chahta hua ki ,kya kisi bhi company keh share ki expiry date nirdharit hoati hai yiaa nahi ,like that icici ka share 2000 seh start hai ,per expiry date ???? of share
    Thanks

  33. Thank YOU manishiji
    Per mera demat or trading Ac process meh
    Hai,meh jaynna chahta hua ki
    Day trading or delivery based trading
    Samjo ki mehne aaj Z company keh 100 share 100 keh bhav seh kharide or 1 gante bahd 102 price hoati hai toh meh bech dehta hua it mean intraday trading ,
    agerbajebaje tahk shkie ki price 99 hoa jahti hai, or meh bechta nahi toh yea automatically delivery based trading hoajahti hai yiaa kuch or system plz tell me!

  34. Avinash

    Thanks Manish, I found it very useful. I have bookmarked ‘jagoinvestor.com’.
    I am new in this and started experimenting –
    I buy shares from sharekhan.com on my own and I can see them when I login to the account under portfolio. does it mean that I have trading + demat account with sharekhan?

  35. radhika

    i have opened a DMAT account in axis bank.can u plz explain me how does trading work?how and wer u buy and sell

  36. Trideb

    can i have demat account of one company and trading account of other??? say, I have demat account of angel and trading account of SBICap and work in securities???

  37. Manjunath

    Hi All,

    I Open New Trading account and Demat account in my saving bank account, but the thinking is when i open the trading and Demat account i fail to read all details about Selling and Buying broker charges and later i know it the bank which i took the trading account and Demat account they are charges more, like each transaction they are charging Rs.15/- (Selling and buy) its too much deducted my account now i read all the details i know about little bit about Trading and Demat account broker charges what i am feeling now means i want keep my demat account same but i want change Trading account or need to take one more trading account in same demat account its possible ?

    Because when i asked my trading account help line they said like NO, in the website its mention we can open more den one trading account in the same demat account i want confirmation its ture or not..

    Please Suggest me

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