How trading is done in Indian commodity market ?

Posted by epicresearchindore on March 20th, 2017

Commodity trading is another way of making investment by buying and selling of different useful commodities.Most of the investors who invest in commodities generally consider commodities as a useful resource. Online commodity trading is very popular and successful as it offers different benefits. Traders can earn better while trading in commodities by using mcx tips as suggested by experts who are having good knowledge of commodity market.

Commodities which are traded on exchange are broadly classified as followings:

Soft Commodities : Agricultural produce and livestock

Hard Commodities : Natural resources

How trading is done in commodities is discussed below :

Spot and futures commodity market

There are primarily two types of commodity market: Spot market and Derivative market. In spot market trade order is settled in cash and preferred in retail market. In derivative market there are three contracts namely: future, options and swap through which trading is undertaken here. Every contract has its own norms which has to be fulfilled by the trader. Rarely physical delivery of commodities is taken in this, investors participate in these contracts to make benefit from future price fluctuations. MCX trading tips are helpful in gaining good returns while trading in hard commodities. Spot market in India is unorganized and does not have any regulatory body. On the other hand future commodity market is organized and regulated by Security Exchange Board Of India.

Commodity exchange of India

MCX(Multi Commodity Exchange) and NCDEX(National Commodity and Derivative Exchange) are the two exchange of commodity market. Price fluctuations in commodities are ruled by demand and supply factor in spot market, but with the involvement of future market it has made commodity trading similar to other trading practices. Though there are two major exchange, MCX has more market share .

Commodities traded in India

Gold, silver and crude oil are the most popular traded commodities. Commodity trading is different from other trading practices like equity, bonds and stocks. For the same commodity multiple contracts with different norms exists. Traders can analyze their needs and accordingly choose contract.There are two types of participants in commodity market: Investors and Retail Investors. Several benefits a trader can gain while trading in commodities like hedging against future price risk. As we know market is of highly volatile nature having some commodities as a part of your portfolio helps in better risk management.

Traders can trade in commodities on either of the exchange or they can open account with brokers registered with these exchange as well.However to trade in commodities future , account with registered broker is must.And settlement in commodities futures can be done in cash or by physical delivery. Traders can wisely invest in commodities by having a good knowledge about market . Experts suggestions on stock tips and other market related trading tips helps in managing risk and returns . Such experts suggestions can be availed with the help of financial advisory services providers.