Basic Information about Commodity Trading

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Basics of Commodity Trading

Commodity Trading

A commodity market provides facility to trading in different kind of commodities. Commodity Market sticks up all over the world. It is the oldest trading market from all the trading markets. In commodity trading there are many products are traded such as soft commodities, hard commodities etc.  In soft commodities agricultural products are included, major agricultural products for trading are Channa, wheat, rice, coffee, cocoa and sugar. On the other hand gold, oil, rubbers are included as commodity products in hard commodities. There are more than 50 major commodity goods traded worldwide. For different kind of commodities need different trading strategies and different exchanges to perform trading. Commodity market is differentiates on product delivery basis, It may be a spot market or a derivatives market. Spot market is very active market; commodities traded for immediate delivery, whereas in the case of derivatives market, a variety of financial tools based on commodities are traded. These financial tools such as ‘futures’ are traded in require exchanges. Securities and Exchange Board of India which short name is SEBI, it control the stock market and all the traders of different segments follow the rules of SEBI, Forward Markets Commission (FMC) is available to regulate the commodity market.

Commodity Future

A Commodity future is different kind of trading. A commodity futures contract is a deal between two different parties in which one buys or other sells and vice versa, commodity future trade at a future date at today’s future price. Sometime it is long term process from few days to many months, and it may be extended as trader need. Futures contracts are differ from forward contracts in the cases that they are consistent and exchange traded. We can say in other words, the parties of the contracts do not make a decision to the conditions of futures contracts; but they simply admit conditions consistent by the Exchange. Mostly traders are interested in future because it takes long time but at this low risk level. If you have a good Commodity Tips then future deal will be best trading mode.

Trading Exchange

NSEL (National Spot Exchange Ltd) is a national level exchange for spot commodity trading, institutionalized, electronic spot exchange place up by Financial Technologies India Ltd (FTIL) and NAFED (National Agricultural Co-operative Marketing Federation of India Ltd) regulate spot commodity trading, it is constructed a instant delivery base pan-India spot market for commodities.

 How do I buy commodities in demat form?

Before start trading you has to open 3 major accounts which are saving account, demat account and trading account. All these account are necessary for all trading segments. Many financial industries and banks provide facilities to open accounts for trading. Many banks give you option to do this. You have to primary register yourself as a customer with National Spot Exchange. After registration you are able to do trading. You can take broking service from reliable broking company. Traders have to pay to broking firm for their services. You can put your order for e-Series products by creating a phone call to your broker or directly via online trading. Sometime online trading is very comfortable and you can trade from anywhere by mobile phone, tablets and other electronic instruments. Thither are many firms, provides their apps which are really helpful to us to perform trading and watching the market. These apps are sometimes are free of cost.

Is the profits percentages uniform for all commodities shares?

In commodity trading margin percentage may be different from commodity product to another commodity product; it is basically according to risk which is involved in it, and it is also depends on other such as its liquidity and volatility as well and the general market situations. Here risk is directly relative to the margin percentage, if the danger is higher than margin also higher and vice versa you need always superior tips like as Forex Tips to increase your chance to get earnings. But all agreement within the same underlying is of same margin %.

Which are the main commodity exchanges available in India?

India is big country and 24 commodity exchanges are available here. Among of these three national level commodity exchanges such as MCX (Multi Commodity Exchange of India Ltd), NCDEX (National Commodity and Derivative Exchange), NMCEX (National Multi Commodity Exchange of India Ltd).  They are regulated to all commodities.

MCX

The full form of MCX is Multi Commodity Exchange of India Ltd and this exchange established at Mumbai city. MCX is a self-governing multi commodity exchange. Mainly MCX regulate gold trading, all the rules which are follow for gold commodity trading generated by MCX exchange. The famous reliable MCX exchange is a part of the world’s top three bullion exchanges and also included in top four exchanges for energy.  The MCX is big exchange, its key shareholders are very big industries which are SBI (State Bank of India), Financial Technologies (I) Ltd., and its major associates banks are National Bank for Agriculture and Rural Development (NABARD). MCX has a website which name is Mcxindia. Trading in MCX sometime be beneficial if you have proper knowledge of MCX Tips.

National Commodity and Derivative Exchange, Mumbai (NCDEX)

NCDEX is another exchange of commodity trading, in this trading exchange mainly works for trading on agricultural products such as Channa, Rice, Cotton, Soyabean, Wheat etc. A association of organization support NCDEX. Many private and semi-government banks and financial organization supports to the NCDEX. These include the ICICI Bank Limited, Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE) and many more.  National Commodity and Derivative Exchange has a website, which name is ncdex.com.

National Multi Commodity Exchange of India Ltd, Ahmadabad (NMCE)

It is the primary de-metalized electronic multi-commodity Exchange of India. Some of its key promoters are Gujarat Agro Industries Corporation Limited (GAIC), Central Warehousing Corporation (CWC), National Agricultural Co Operative Marketing, Punjab National Bank (PNB) and Federation of India Limited (NAFED). It also provides their website to all traders which name is nmce.com.

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