What is Commodity Market?

We have must heard about equity or stock market equity market is a market where we trade on company’s share but when we trade on naturally things like cotton, crude oil, palm oil, gold, silver, nickel & Aluminium such trading is called commodity trading

Most of the Indian people prefer to invest in gold as gold prices always increase and also of silver that is why these two are the most precious metals also and people like to trade

Let’s have a definition of commodity market: Commodity market is the place where trading in commodities is done. It is similar to an equity market, but instead of buying or selling shares one buys or sells commodities it’s all done through commodity exchange MCX.

What is commodity exchange: A commodity market exchange can be defined as an organization or association or mediator which has a place where trading is done in the same selected commodities

Time: Commodity market is on 10 am to 11.30 pm while equity market is on only from 9:15 to 3:30 that why traders get lots of time to think and also for bidding you can change your decision in this period of time.

There are following characteristics of commodity market

1) Tradability 2) Liquidity 3) Deliverability

There are two types of commodity market in India 1st agricultural (palm oil, jeera, cotton)

2nd Non-agricultural (Gold, silver, zinc, Aluminium,)

Crude oil & natural gas come under energy. Most of the Indian people invest in gold and buying of property

What are the different types of commodities that are traded in these markets?

.Precious Metals: Gold, Silver, Platinum, etc.

.Other Metals: Nickel, Aluminum, Copper, etc.

.Agro-Based Commodities: Wheat, Corn, Cotton, Oils, Oilseeds, etc.

.Soft Commodities: Coffee, Cocoa, Sugar, etc.

.Energy: Crude Oil, Natural Gas, Gasoline, etc.

Two types of trading are done in Gold 1. Physical2. Exchange

In physical trading, it takes more money than trading through the exchange

For example: There are 2 friends  Rajesh and Rohit both of them want to do business of gold Ramesh went to sarafa market and purchased 30 gm of gold which cost is 30k other hand Rohit also took 30gm gold from exchange Ramesh had to take locker for gold safety as he can’t keep gold at home due to of Stealing after one month gold rate increased both of them sold their gold at 31000  profit was same but the difference comes on their investment Rajesh’s investment was 30k whereas Rohit investment was only 3k in exchange Ramesh profit ratio was 30% while rohit profit ration was 10 % trading you only have to pay token amount only

So its require less amount and profit is same So we should go for exchange trading it is very safe and time-consuming also requires very fewer amount exchanges provides physical delivery  also  if someone needed the same but most of the people don’t need any physical trading they just want to get its difference amount

Commodity trading has become vast now days and one more thing commodity trading is done on lots means you have to buy the gold which exchange has decided you will have to buy minimum this much gold you can’t buy less than that gold lot size is 100 while silver is 30 it is the platform of doing trade which is government approved the same demat account is also require here and also broker The broker will take his brokerage.

But along with profit chances  of losses  are also high but the advantage  of commodity market is that requires only token amount it is not necessary to pay the whole amount that’s why you can trade very easily

The benefits of commodity market

A commodity market is the definite place where traders can do their transactions.

This market also provide regular information about the prices of the commodities as well as future trends

The exchanges provide a ready and continu­ous market for the purchase and sale of commodi­ties.

The commodity exchanges provide the pro­ducers an opportunity to transfer their risk to the professional risk-bearers

A Commodity market is a place where trading in commodities is done.

It is very similar to the stock market, but instead, to buy and sell shares one buys or sells commodities.’

What benefit do the commodity derivatives provide for investors?

Futures contract in the commodities market, similar to equity derivatives segment, will facilitate the activities of speculation, hedging, and arbitrage to all class of investors.

  • Provides huge profit than cash
  • It is very safe trading
  • Provides a nice platform for trading
  • We will be safe from frauds
  • We can take advantage of price fluctuation

To understand and for commodity tips you can hire advisors who are having complete knowledge of this market your broker can also provide you tips but their main task is not this they also hire researcher but there are so many advisories companies which provide daily trading tips Ways2Capital is one of the fastest growing advisory of India which is ISO certified and also a SEBI registered company.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.