These Commodity trading markets enable people to exchange goods for money and vice versa. These goods or commodities can be anything and can belong to any sector may it be agricultural, mineral, fossil and many more. The commodity trading market observes the trading of various commodities such as cereals, ginned as well as un- ginned cotton, pulses, oils, jute, sugar, gur, cotton, oilseeds, coffee, tea, jute products, potatoes, onions, petrochemicals, gold , silver, crude, metals and many more commodities.

The regulator for the commodity trading market in India is the Forward Markets Commission. It is similar to SEBI (Securities and Exchange Board of India) which performs the role of protecting the interests of investors in securities. The commodity market in India is mainly influenced by the demand and supply equation. Various external factors such as social changes, weather, policies of the government, global factors drive the commodity market as well.

The commodity trading market in our country is said to have a daily turnover of 120 Billion rupees to about 150 Billion rupees on an average. The total commodities derivatives trade value forms 66% of India’s GDP (Gross Domestic Product). It is also believed by a lot of people that this percentage will only keep rising in the future.

A few of the important things to be considered and taken care of while trading commodities have been given below:

The first and the foremost strategy which is highly recommended by several commodity trading professionals and advisors is of following the trends. They all believe that the prices of a particular commodity follow a particular trend or pattern. Proper study and effective implementation in the direction of the trend can help you make profits.

Another strategy which is commonly recommended is the range trading strategy. This is helpful particularly during the times when the trend following strategy is of little use. This strategy states that buying of commodity should be done when price of the commodity is in its lowest range and similarly you should sell the commodity when its price falls in the highest range.

Season is an important factor which needs to be considered while making your strategies for efficient and profitable commodity trading. Seasons or the regular cycles throughout the entire year play a defining role in the variations of the commodity prices. There are variations in demand and supply of commodities in various seasons.

Various other factors and strategies which play a very important role in the commodity trading market are hedging and speculation.

Diploma in Commodity Trading: DICT as commonly referred in one such commodity trading course which has been initiated by the Welingkar Institute of Management Development & Research’ in association with the Multi Commodity Exchange of India (MCX) as their training partner. It is mainly developed for beginners who want to step into commodity training.

Basic Programme on Commodity & Commodity: This is a short term programme of 2 days which is usually conducted by the BSE (Bombay Stock Exchange) Training institute and is designed in such a way so as to create more awareness about the fundamentals of Commodity Trading and Commodity Derivatives.

Diploma in Commodity Market Trading: this is another Diploma course which has been initiated by the Mansukh Institute of Financial Markets which is situated in New Delhi, India. The objective of having this course is again attracting more and more investors and creating general awareness about commodity trading.

A large number of institutes also offer various online courses on commodity trading for the working professionals, house wives and entrepreneurs who do not get much time to go and attend the courses. These courses which are available online are generally available in the form of modules or lessons.

Taking up one such commodity trading course from any reputed institute will surely give you enough knowledge to understand the terminologies of the commodity trading industry or start trading.

The largest and the most reputed regulatory bodies for the futures commodity trading has been considered to be the MCX or the Multi Commodity Exchange of India in the terms of the number of contracts as well as the total turn over volume. Various other commodity exchanges where commodity futures are traded are the National Commodity Derivates Exchange or the much commonly called NCDEX as well as the National Multi Commodity Exchange. Other than these 3 exchanges there are twenty two more commodity exchanges in India.

There are more than 90 commodities which are traded in the futures commodity market. These commodities include various agricultural commodities such as jute, gur, wheat, coffee, rice, etc.; various pulses such as chana, urad etc.; oilseeds such as groundnut and coconut oil, sesame seeds, sunflower oil; spices such as turmeric, chillies, pepper, metals such as aluminum, copper, tin; precious metals such as gold as well as silver; crude oil, natural gas, coal and many more.

Out of all the commodities which are traded in the futures commodity market the four major commodities which have the largest share in terms of trading are Gold, Silver, Guar Seed and Chana.

The commodity futures market are of great use to the producers, the investors as well as the traders since they can sell the futures of the commodity (selling a particular amount of the commodity on a particular date at a pre decided fixed price or a particular price) and make sure that they are protected against any sudden changes in the market price.

1. Futures 101: An Introduction to Commodity Trading by Waldron, Richard E. :

This book is fresher guide on commodity trading .this book explains how profit and losses are made in commodity market and hoe the commodity financially works. There are case studies, briefing, alerts and the book is user friendly and easily understandable

2. Commodity Trading Manual by Chicago Board Of Trade, the Glenlake Publishing, Glenlake Publishing:

This book is 1998 edition mainly for future industry and provides knowledge to new potential professionals of market. The book shows both the past i.e. from Ancient Greece to Old Chicago and futuristic views of many companies.

3. Point & Figure: Commodity & Stock Trading Techniques by Zieg, Kermit:

Veteran P&F analyst Kermit Zief suggests the various steps for developing; inferring and optimizing point and figure chart which is a good briefing of the easiest chart. The book can help in converting a basic user into a trader who can work in big financial institutions.

4. Advanced Commodity Spread Trading by Goldberg, Harold

The author has an excellent knowledge of commodity market trading. The “Twin Line” approach is new term discovered by author who describes 2 extremes i.e. the difference between highest and lowest price of commodity. This helps the trader to give 2 dimensional views to commodity.

5. Advanced Commodity Trading Techniques by Hamon, J.

The book not only covers the commodity trading techniques but also covers the geometrical analysis of trading which covers various concepts like Fibonacci, Ekkiott, Andrew’s meridian lines, etc. The book is most important for a person who doesn’t have much computer knowledge and can do trading using the geometric analysis.

For more commodity trading books online please visit the links given below:

http://www.traderslibrary.com/seo/commodity_trading.html

http://www.amazon.com/s/ref=nb_ss_gw?url=search-alias%3Daps&field-keywords=commodity+trading&x=17&y=15

Commodity trading derivatives was initiated in order to protect the farmers of the country from getting low returns for their produced agricultural commodities because of the value of the crop going below the cost price. On a large number of agricultural commodities such as cotton, coffee, pepper, turmeric, rice, wheat and many more, varied Derivative contracts started getting offered.

To look at it, today, there are more than 100 different commodities with derivative contracts which are currently available to the masses for trading. And the trading of these commodities can take place at about 25 different commodity derivative exchanges which are present in India. Of all the commodity derivative exchanges the NCDEX or the National Commodity and Derivatives Exchange is considered to be the largest commodity derivatives exchange.

There was a time where Commodity derivatives were mainly developed for reducing the risk factor or risk management purposes. Although, these days the use of commodity derivatives is not limited to risk management and they are being commonly used by the masses as an investment tool.

The history and past experience of professional has always shown that Commodities market and trading had the major impact on the financial status of a country. The history is unknown but China had started with the commodity trading around 6,000 years ago and the commodity was Rice. The observations also shows the main reason for World War II was sue to Japans venture into many alienate countries for commodities like secure oil and rubber just because of shortage of that commodities. Also over growth of certain commodity may result in the reduction of price of that commodity.

Crude oil i.e. energy commodity are kept under surveillance by all countries, corporations and organizations which are related. The high crude oil price may affect the Western countries on the other hand the Middle East countries which are dependent on the petroleum as their daily bread are heavily affected by the decrease in the crude price. The things that can affect the commodities the most are devastations caused by the weather like heavy rain or cyclone and some natural disasters like earthquakes or volcanoes. Some times they also cause region wise food shortages.

The commodity trading is divided into 4 basic categories which are as follows:

1. Energy commodity which includes natural gas, gasoline, crude oil, etc.
2. Metal commodity which includes silver, gold, platinum, copper, etc.
3. Livestock and Meat commodity which includes pork bellies, cattle, feeder cattle, lean hogs, fishes, etc.
4. Agricultural commodity which includes all the farming products like cotton, soybeans, wheat, rice, coffee, sugar, etc.

The demand of more and more trained professionals has resulted into the rise of the commodity trading institutes which offer short term, diploma as well as few months Commodity trading courses in India. To think about it, it is these commodity trading courses which can take a lot of credit for introducing a large number of people to the whole new world of commodity trading.

These courses teach you everything from how to:

• Make smart commodity trading decisions,
• Be a successful commodity trader
• Understand the history as well as the basics of the commodity trading market
• Manage your money and plan exit strategies
• Place order
• Understand market terminology
• Calculate profit and loss statements
• Place smart and money making trades
• Make good money with little effort and short span of time.

Several colleges in various parts of our country have realized the potential of these commodity trading courses. Thus, one such management college called ‘Welingkar Institute of Management Development & Research’ had started a unique program called as the DICT or the Diploma in Commodities Trading in association with the Multi Commodity Exchange of India (MCX).

A large number of private institutes also have a large number of short term courses or the capsule courses which are specially targeted towards the beginners, house wives, management professionals, entrepreneurs etc.

In India equity trading had always been one of the greatest boosters. But, now a days because of people’s affection towards gold and silver even commodity trading has been increasing. This brings itself to around 3 times the volume of equity traded.

Commodity future is the prediction of a commodity i.e. future supply of a commodity on particular date and price. Contract Expiry date is the predicted future date and the contract size is fixed quantity. Due to the introduction of commodities future the total of retail traders taking part in market has been gradually increasing. In the next 5 years the commodity market is expected to grow by 40%.

The List of exchanges in India are: Bhatinda Om & Oil Exchange Ltd., Batinda., The Bombay Commodity Exchange Ltd.Mumbai, The Rajkot Seeds oil & Bullion Merchants` Association Ltd, The Meerut Agro Commodities Exchange Co. Ltd., Meerut, Ahmedabad Commodity Exchange Ltd., and many more.

The few majors in commodity exchanges are:

MCX(Multi Commodity Exchange of India Ltd.): MCX presents futures trading defined in terms of type of contracts offered in 58 commodities, from various market segments including energy, bullion, iron and non-iron metals, oil seeds, and other agricultural commodities. It is the worlds first and fore most also one and only company acquired ISO 27001:2005 certification

National Multi-Commodity Exchange of India Limited (NMCE): It was declared a National status in November 2002 on permanent basis by Govt. of India. And is considered to be first De-Mutualised Electronic Exchange

National Commodity & Derivatives Exchange Limited (NCDEX): It is a private limited company which has obtained Certificate for Commencement of Business in Mat 2003 and is online commodity exchange based in India.

The traders get the market data from the market exchange via their brokerage. Some brokerages provide market data free for active trading accounts, while others charge an additional fee, either for all of their markets or for each exchange. Most traders will use the market data provided by their brokerage, but some traders will use market data from other sources instead of, or in addition to, data provided by brokerage. Some of the software’s used are listed below:

• Charting software is the software that day traders use the most. Some trading brokerages provide charting software as part of their trading software, but often they do not offer the variety of features that the charting software offers.
• Brokerage provided trading software is to make trades, but some traders prefer to use additional trading software that interfaces with their brokerage provided trading software.
• Additional trading software (sometimes known as a front end) can provide a different display, and different features (such as automatic target and stop loss orders), and is comparatively easier to use than brokerage provided trading software.

Some traders prefer to program their own additional trading software. It allows the traders to program the software in their preferred way of programming and to include exactly the features that they want when they are trading (such as breakout entries, automatic reversals, etc.).

These choices will provide the basics that are needed to start trading, while still allowing more of the experienced traders to expand into multiple markets, advanced trading systems, and even automated trading, without changing their tools, that to at no additional cost.