Commodity Market in India
Trading in food product is not a new thing, it started from ancient time. But as the time passes toward the future, the commodity market goes organized.
But commodities trading in proper organized way started from 19th century. Trading in commodity is not only limited in food product it also covers the other valuable products like gold, silver, copper etc.
Commodity market is the place where commodity products are bought and sold. We can distinguished the commodity product into two category such as-
Soft commodity and Hard commodity. In soft commodity agriculture products such as wheat, sugar soyabean, and other seeds are includes.
In hard commodity includes gold, silver, copper and other precious metals and natural gas and crude oil.
As the market develop in rapid speed as the participant, volume and products increases simultaneously and today it reach all over the world. Now a days it plays an important part to represent an economy.
Commodity market provides two other facility to trade in market called Spot market and Derivative market.
In this market all the exchanging take place instantly. i,e at the negotiated price, they bought and sold the commodities product. There are so many mandis present to deal with this type of commodities. In spot market buying and selling of commodities is done in cash with instant delivery.
This market provide the facility to buy or sell commodity product via Derivative contracts. A derivative contract is an agreement and a standard proforma to buy or sell commodity products for the particular price and for a fixed time period in the future. In future contracts buyer can take the physically delivery of commodity on specified cost.
Key Commodity Products which are traded – Copper, Gold, Silver, Aluminum, Nickel, Zinc, Lead, Crude oil, Natural gas.
Commodity Exchanges in India
- Multi Commodity Exchanges (MCX)
- National commodities derivatives exchange (NCDEX)
Multi Commodity Exchanges (MCX) –Global or International products like Silver, Gold, Crude oil are trading in this exchange with more volume& liquidity. Multi Commodity Exchanges (MCX) was established in 2003 and based in Mumbai. It is the world’s 6th largest commodity trading exchange.
National commodities derivatives exchange (NCDEX) – Including all metals like Silver, Gold and Agri products are trading in this exchange.
How is trading done in commodity market?
Trading in commodity market is done in two types:
Online trading: By using high speed Broadband Internet you can trade on your own – Purchase/sell independently.
Advantage of Online trading: By own trading – no one is misguide / Broker can offer lower brokerage)
Offline trading: With the help of these trading Dealer working in your Broker/adviser Company you may call and trade.
Advantage of Offline Trading: You can trade any place and anywhere by the help of phone call and trade Dealer may help right entry or right exit.
Like Securities and Exchange Board of India (SEBI) in equity market, Forward market Commission (FMC) regulates the commodity market.
What are Derivative Contract?
It is an agreement between two parties i.e, Buyer and Seller, where the value of the contract is obtain from the value of an underlying asset. It can be stocks, metals etc.
Here are some commonly used contracts are :
It is a customized contract between two parties to exchange assets at specific future date and price. On the due date of contract, deal is executed and seller party have to deliver the asset and buyer have to pay the amount.
It is an agreement between two parties to exchange commodities at pre-determined price in the future. The price of commodity is fixed by the bidding process.
This contracts give the right to the owner not the obligation to buy or sell on negotiated amount of the commodity on or before the specified date.
Participant of Commodity Market
They are the main entity of commodity market. Some participant of commodity market are –
Day Traders Or Intraday
They are the short term traders. Who take position for a single day or less time. Trader can take mcx tips from various resources.
They are the long term traders. Who take position for a weeks or even months.
It acts as a mediator between trader and exchange and provide a platform to buy or sell commodities.
It is a central place where financial instrument are traded. Financial instrument like Commodities, Equity, Mutual funds etc
If you want to trade in commodity market follow some basic strategies. Trading with best strategy or plan will keep you focused, disciplined way and on track.
Market Trading Time
Multi Commodity Exchanges (MCX) will open at 10 AM and will close at 11.30 PM. Within these times you can trade.