Commodity Trading

10Aug/100

Commodity Exchanges In India

The exchanges that have been allowed to trade in commodities in India are:

Bhatinda Oil Exchange Ltd. (Bhatinda)
The East India Jute & Hessian Exchange Ltd (Assam)
The Bombay Commodity Exchange Ltd. (Mumbai)
The Meerut Agro Commodities Exchange Co. Ltd. (Meerut)
The Spices and Oilseeds Exchange Ltd. (Agra)
Ahmedabad Commodity Exchange Ltd. (Ahmedabad)
India Pepper & Spice Trade Association. (Kochi)
National Board of Trade. (Indore).
The Chamber Of Commerce, (Hapur)
The Central India Commercial Exchange Ltd. (Gwalior)
The Kanpur Commodity Exchange Ltd. (Kanpur)
First Commodity Exchange of India Ltd (Kochi)
Bikaner Commodity Exchange Ltd. (Bikaner)
The Coffee Futures Exchange India Ltd. (Bangalore)
National Multi Commodity Exchange of India Limited.
Multi Commodity Exchange of India Ltd.
National Commodity & Derivatives Exchange Ltd.
Haryana Commodities Ltd. (Hissar)
e-Commodities Ltd.

As much as we have tried to make this list comprehensive, there may be some other listed commodity exchanges as well which are not present in this list. The major indices among these are MCX, NCDEX and NMCE. MCX is the largest index as it involves a huge volume of trading. More details about MCX and NCDEX are given below.

Multi Commodity Exchange of India Limited (MCX)

It is located at Mumbai. It began its operations in the year 2003.The major stakeholders in this exchange include banks like State Bank of India, Union Bank of India, Corporation Bank, Bank of India and Canara Bank.
National Commodity & Derivatives Exchange Limited (NCDEX)
It is located in Mumbai. It was established in the year 2003. This index is promoted mostly by the institution all over India. The chief promoters supporting this index include ICICI Bank Limited, Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE).

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10Aug/100

Commodity Day Trading

Commodity day trading is a popular concept that has come about in the past few years. Commodity day trading is similar in concept to shares day trading. Thus in commodity day trading also we have investors and traders who invest in commodities by buying a particular commodity when the trading exchange opens and selling it off before the closure of the market.

Sample this. You have a feeling that the price of gold is going to increase on that particular day. Hence you buy the gold once the market opens but sell it off before the end of the day. If the price of gold increases then you make a profit else you make a loss. But if you keep practising day trading on a daily basis then invariably you will end up making a profit due to the general trend of commodity prices. But in order to make substantial profits you need to be able to diversify your commodity investment.

Thus a part of your portfolio can be dedicated to Gold, another part can be dedicated to oil and the remaining part of your portfolio can be dedicated to other commodities. Thus even if your one investment is going through a bad phase on a daily basis for example the prices of oil are fallling daily then some other commodity will help you keep your portfolio running. Hence commodity day trading is a useful practice employed by several commodity traders every day and it has been a successful and a profitable practise as well for them.

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5Aug/100

Commodity Trading FAQ’s:

If you are a beginner and want to get into commodity trading then you would be having some questions before you actually begin to invest your money into commodities. Here are the most common and the most frequently asked questions regarding commodity trading.

When can I start trading in commodities?

You can start trading in commodities any time. You will though have to trade with a commodity broker who is a listed one and also register using your PAN number or your personal access number.

What all can be traded on the commodity market?

You can trade on Gold, silver, metals, and agricultural products like cereals, pulses, cotton, oil seeds, jute, sugar, potatoes, onions, coffee, tea and others.

Does commodity trading exchange have any regulators?

The Forward markets commission is the regulator in India for the commodities market just the way in which the Securities and exchange bureau of India or SEBI is the regular for the securities market.

What are the risk factors involved in commodity trading?

Commodity trading like any other form of trading has risks associated with it.

Just the way currency trading or stock trading has risks so does commodity trading. Hence you should preferably diversify your investments through a bouquet of investments in order to minimize the risks associated in general with trading.

What can I do to prepare myself against risks in commodity trading?

You can keep your self well informed by reading about the demand supply issues affecting that particular commodity.

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2Aug/100

Commodity Trading Brokers

The job of the commodity trading brokers is to suggest and advice you and to make strategies for your further investments. While selecting a broker or a brokerage firm for commodity trading several factors need to be considered. Make sure that your commodity trading broker has a good reputation and should also show high proficiency in their work.

It is also very important to know as to what your broker specializes in- whether he has more general knowledge, whether he relates better to day traders, whether he is better at option trades, etc.Several other factors which need to be considered while choosing a broker are their commissions, business record, their type of service, the clearing arrangement, etc. it is better to pay a little more brokerage to have a highly experienced broker against a neophyte who charges less since there is more possibility of getting better results.

Make sure that your broker has adequate knowledge about the commodity you wish to do trading in. Also find out about the commission charges of the commodity trading broker as well as the services he/ she offers.

There are a large number of brokers and brokerage houses in India for commodity training. Out of hundreds of brokers who are spread all across the country, a few well known commodity trading brokers and brokerage firms which are available in India are: