Trades like Forex and Stocks, Commodity Derivatives are increasingly popular among Indian investors as the market has opened up a nationwide platform for retail investors and traders to participate in commodity markets.
A variety of commodity changes, such as the National Commodity and Derivatives Exchange of India, the Indian Multi-Commodity Exchange and the Indian National Multi-Commodity Exchange, were established in the country to support retail investors who want to diversify their portfolios beyond stocks. , bonds, real estate, and start commodity trading.
The trading and settlement systems of these exchanges are electronic, making it easy to handle commodity futures such as gold, silver, base metals, crude oil, natural gas, agricultural products, etc. without the need to use them as physical inventory. In addition, real-time stock prices allow traders to quickly track market movements and make more informed decisions.
Understand the basics
In commodity trading, investors can fund their accounts based on their level of comfort and risk tolerance. However, you must begin to be familiar with the specifications of placing orders and trading strategies to handle and prevent excessive trading wisely.
In commodity trading, investors need to do their homework, understand the basics of demand and supply, and make decisions based on the storage and consumption of the product. It provides investors with an excellent portfolio diversification option because commodity futures are less volatile than stocks and bonds.
Retail investors can participate in commodity trading that seeks broker-backed support and conduct transactions online, similar to stocks. The forward market committee regulates these changes, but the brokers here do not need to register with the regulator.
Similar to stock trading, investors also need a bank account, and the commodity demat account and deposit account can begin. Need to reach an agreement with the broker. Investors must also provide the "know your customer" format and the necessities required by exchanges and brokers.
At a minimum of 5,000 rupees, retail investors can start their commodity trading journey because the marginal amount of the actual value of the merchandise contract [5-10%] is paid in advance by the broker.
Each broker and item may have different quantity and quantity requirements. For example, in the case of gold, one trading unit [10 grams] is between 30,040 rupees and 10% is prepaid before 3,004 rupees. The ratio of trade lots to agricultural products also varies by exchange [in kilograms, metrics or tons]. However, the starting price of the fund is about 5,000 rupees.
Cash and delivery mechanism
Although each exchange allows cash and delivery mechanisms in the transaction, when you choose to settle in cash, you will be advised in advance that the item will not be delivered when you place the order. If you choose to accept or deliver, please keep all warehouse receipts for review. In addition, you can change your selection multiple times between cash settlement and delivery mode until the contract expires.
Understand the cost
The broker can charge a fee from 0.10-0.25% of the contract value, but cannot exceed the maximum limit set by the exchange. Transaction costs also apply to Rs. 100,000 and Rs 10 per contract. While research and collection of information from various sources, such as financial newspapers and magazines, is helpful, and adhering to online commodity prices and real-time stock price portals is key to obtaining information and successful commodity transactions.
Orignal From: Investors diversify their investments through commodity trading
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