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 ?