Basics of commodity trading in India

Basics of commodity trading in India

A commodity market allows you to trade in varied materials and earn money. The share market is for trading stocks while this market is for investors and trading majors to take a position based on certain economic or arbitrage. 

When undertaken in a smart manner, the commodity trading India can be extremely profitable. Indian investors are already warming up on the various opportunities offered by this method for the best results. 

Understanding commodity trading 

Commodity can be any group of goods that are exchangeable by nature. Commodity can be moved physically and is exchangeable. In case of commodity trading India, trading happens on the exchange basis where commodities and derivatives are bought and sold. The items include agriculture and gold products. 

How to trade in commodity trading India? 

Like equity and share trading, a commodity must be sold in case of commodity trading India. When you buy a commodity by expectation of getting better value, you can sell it when it reaches to a desired price. Some traders sell these only when they perceive that there will be no major appreciation in the upcoming price. 

Commodity futures

While opting for commodity trading India, the same happens either in the form of spot or future options. 

The spot market has immediate exchange of goods in exchange of cash. On the other, the commodity futures are since the commodity is traded on standard values as based on the future values of the said goods. However, the same happens using electronic channels while the final settlement is made through cash. 

Seeking delivery against commodity

Commodity futures are contracts for future delivery of goods. Thus, using the commodity trading India, you can get delivery of goods against futures if there is sufficient logic in the design. The same comes from bids and offers put in by various parties like dealers, traders, and investors. 

Commodity Exchanges 

In India, there are Commodity Exchanges like 

  • The National Commodity & Derivatives Exchange Ltd. Or NCDEX
  • Multi Commodity Exchange of India Ltd. Or MCX
  • Indian Commodity Exchange Limited or ICEX

The National Commodity & Derivatives Exchange Ltd. Or NCDEX allows trading in agriculture goods like barley, paddy, maize, Guar, and cotton. On the other side, the Multi Commodity Exchange of India Ltd. Or MCX market has trade in gold, bullion, base metals, energy products like crude oil, etc. 

David Lockhart