WHAT IS COMMODITY MARKET
A commodity is a trading product that can be produced traded and consumed. That is any item that has a commercial value is called a commodity. People also buy and sell the product in the commodity market like the stock market.That is a commodity market is a market that trades in primary economic zones rather than manufactured products. Special commodities are agricultural products such as wheat, spices, pulses,coffee, cocoa, fruits and sugar, and hard products are mined, such as metals,natural gas,gold and oil. Fully Financial Transactions with Investors Know about 50 Major Commodity Markets Around the World
There Are 2 Types Of Commodity Market
2.Non Agriculture Commodity
1. Agriculture Commodity : Agriculture commodities are those commodities which are directly related to the agricultural sector. Such as: barley, wheat, soybean, coriander, cumin, turmeric, cotton etc.
2. Non Agriculture Commodity : All the commodities which are not related to agriculture but which are considered as commodities in everyday use such commodities are called non-agricultural commodities. Such as: gold, silver, platinum, crude oil, natural gas etc.
Commodity Trading In India Is Done By MCX and NCDEX
1. MCX (Multi Commodity Exchange): MCX is a non-agricultural commodity exchange which mainly deals in Non Agriculture Commodity like: gold, silver, crude oil, natural gas and base metal. Non-Agri commodity trading takes place from Monday to Friday, 10 am to 11:55 pm. The Non Agriculture Commodity Market is open almost all day.
2. NCDEX (National Commodity and Derivatives Exchange): NCDEX is an agricultural commodity exchange mainly traded in agricultural products like: gram, barley, wheat, guar, soybean, coriander, cumin, turmeric. Trading at NCDEX takes place Monday to Friday, 10 am to 5 pm.
How To Invest In Commodity Market
You have to open a trading account. Trading account of share and commodity is different.you should come in contact with any broker.Open a trading account from a broker who has subscribed to a good trading exchange such as MCW.
To open a trading account you must have PAN card address proof and bank account. It is also important to have a computer and good speed net connection.Initially buy your Commodity Advice from your broker and slowly start tarding Hood.
Basic Information Of Commodity Market
- Trading can also be done by paying some money in trading.This amount is called margin. This margin is 3 – 5% of any commodity.
- In the share market you can buy your share for a few years but if trading in commodity trading takes place within 2 – 3 months then the investment is for a short time.
- Like the share market in this too the difference in the market reads from the Global event especially America and China. So always keep in mind the news of these countries and the upcoming event.
- Liquid commodity is more profitable liquid commodity such as crude oil base metal is less risky and the opportunity to come out of the market is always open.
- There is purchase – delivery at present prices for delivery on future date. Delivery of all the commodity can be done but most of the investors simply invest the money and then sell it again.
- You cannot use the trading account of share market here. For commodity market, you have to open a new trading account by meeting with a broker then you can buy from any commodity exchange like MCX.
- Crude oil, Gold and Silver in Non – Agri. In the farm segment, spices and edible oils come in good commodities.
Commodity Exchange Names Of India
- Multi commodity exchange of India limited
- Multi Commodity Exchange
- National Commodity and Derivatives Exchange
- Indian Commodity Exchange Limited
- National Multi-Commodity Exchange of India Ltd
How Commodity Trading Works
Commodity trading in India takes place in the Future And Option market ie Derivatives Segment. In which commodity exchanges introduce buyers and sellers and they contract to complete the trade at a future date on a predetermined quantity and price.Commodity trading is done by two types of people one is hedgers and the other is speculators.
Hedgers are traders who trade in a particular commodity and they do not keep a huge change in the price of that commodity very quickly, so that they already maintain their position in that commodity.Speculators trade by taking advantage of the fluctuations in the commodity price and book their profits and losses before expiry and exit the trade.
Best 5 Commodities For Trading
1. Crude Oil : Crude oil is one of the most traded commodity not only in India but in the world. To buy 1 lot of crude oil on delivery about 55000 rupees is required.
2. Silver : Silver is a Precious Metal 5 Kg. To buy 1 Lot of Silver on delivery requires around 25000 rupees and to buy 1 Lot of 1 Kg Silver Mic on delivery one has to pay a margin of around 5000 rupees.
3. Gold : Gold is one of the world’s oldest currency commodity. To buy 1 lot of 100 grams of gold on delivery, you have to invest around 35000 rupees.
4. Natural Gas : Natural gas is an environment friendly fuel, its demand is also increasing with time. To buy 1 lot of natural gas on delivery about 23500 rupees are required.
5. Aluminum : Aluminum is a light weight metal. It is used a lot in the industry. To buy 1 lot of aluminum on delivery, Rs 7500 is required.
How To Earn Money From Commodity Trading
Select a commodity for trading. Make a trading strategy and stay on your trading strategy, don’t change your trading strategy every day. Learn chart patterns, indicators, and technical analysis.
Crude oil gives a movement of 50 to 70 points daily, if you buy 1 lot of crude oil and earn a profit of 10 points on it then you can earn 1000 rupees on one lot. To buy 1 lot of crude, only Rs 55000 is required. You can earn 1000 rupees a day by applying only 55000 rupees. It is not a big deal to extract only 10 point profit in crude, for this you can use BTC 155 strategy. If you do not know about BTC 155 strategy, then you can search on Google.
How To Open Commodity Trading Account
It is necessary to have a trading account to start commodity trading. Investors can open online or offline trading accounts through a broker. Investor should have computer and internet facility for online account. Trading account is to be opened with the same broker who has membership of these major commodity exchanges like MCX, NCDEX etc.
Tips To Succeed In Commodity Trading
- Take special care of supply-demand in the market,especially while doing business in Agri Commodity. Make sure that you know how the arrival of a crop is in the mandis, and how the production will happen next.
- Trading in liquid transactions is more profitable such as trading in bullion, crude oil and base metals reduces any risk, and remains an option to exit the market.
- While doing commodity trading you have to take care of ‘stoploss’as this reduces your risk greatly. By applying ‘Stoploss’ the deal is automatically cut as soon as you reach that certain price which reduces your chances of loss.
- By giving low margin money in commodity trading you also have the option to trade the profit will be higher by doing more deals but it will prove fatal for you. If you will not trade in multiple lots and trade according to your income then you will be in safe mode and the probability of loss will be negligible.
- There are some fundamental differences between stock market trading and commodity trading. In the stock market you can sell the shares even after several years of buying once while in the commodity market, trading takes only two-three months so buying or selling the deal must follow a certain period.