How to trade commodities as a beginner - Concept & Strategies
The good thing is that Commodity trading gives more time to trade from Morning 9 A.m. to Night 11:30 p.m. Anyone having a time issue in the equity market can trade in better ways in commodities. Here are rates of commodity impact by International issues. It is also very easy to trade on the IIFL Market Mobile App or IIFL Trading Terminals. Our research Team Mr. Anuj Gupta always provides free training through Zoom also anyone can see him on Zee Business or CNBC TV 18 during Expert Analysis of Commodity Trading
In India there are two Commodity Exchange called MCX (Multi Commodity Exchange) and NCDEX (National Commodity and Derivative Exchange) both are regulated by SEBI (Stock Exchange Board of India).
MCX was established in 2003 in Mumbai which is India’s largest Commodity Exchange. MCX timing is Morning 09 AM to 11:30 PM. In MCX metals, Gas, and energy are traded as Future Contracts or Option Contracts.
For a trader, there are two types of Commodities one is a Hard Commodity and the other one is a Soft Commodity. Hard Commodities are Gold, Silver, Copper, Zinc, Natural Gas, Aluminium, Crude Oil, etc. Whereas Soft Commodities are Wheat, Soybeans, Cofee, Sugar, Caster Seeds, Cotton Seeds, Mustard Seeds, Neem Seeds, etc.
Before Trading in the Commodity Market one should must know some terminology that may be useful to generate profits through trading either in Option or future contracts.
Spot Price: Price of the underlying asset in the Spot Market.
Future Price: It is the price of any asset that depends upon the contract Month of Future.
Basis: This is the difference between the Spot price and the Future Price of the commodity.
Margins: This is the Deposit Money required to purchase a future contract of any commodity.
Contract Cycle: It refers to the period of future contract.
Delivery Unit: It is called the quantity of Units per Future Contract.
CALL: This is the type of Options Trading in a commodity market and buy call when one expects a rise in the price of a commodity.
PUT: This is also the type of Options Trading and buy put option when one expects a fall in commodity price.
For More Information regarding Commodity Trading in the Future and Options, one can contact with Allneeds. Allneeds Advisory Services Pvt Ltd. serves PAN India and provides educational and training support to beginners mediocre and experts in the Equity and Commodity market, Who want to create Wealth through trading or Investment.
FAQ
Commodity trading involves the buying and selling of physical goods, known as commodities, such as agricultural products, energy resources, metals, and more.
To trade in the commodity market, educate yourself, choose a reputable broker, create an account, fund it, analyze markets, place orders, manage risk with stop-loss orders, monitor your trades and market news, set exit strategies, and continue learning and adapting your strategies for success.
Effective commodity trading strategies include trend following, mean reversion, fundamental analysis, technical analysis, and seasonality. These strategies help traders profit from price fluctuations in commodities like oil, gold, and agricultural products. The choice of strategy depends on market conditions and the trader’s goals.
Advantages of commodity trading include portfolio diversification, a hedge against inflation, profit potential from price volatility, liquidity, and the ability to invest in tangible assets. It also offers exposure to global markets and can serve as a risk management tool for businesses reliant on commodities.
To manage risk in commodity trading, use stop-loss orders, diversify your portfolio, employ sound risk management practices, stay informed about market developments, and follow a structured trading plan.