Things you must know when trading in commodities.

Commodity market is one of the oldest and very spontaneous form of trading. There are various types of commodities which are traded in commodity market. However, commodity investors mainly play in futures. Trading in commodity can be more easier and more profitable with best commodity tips. Before investing in commodities, investors needs to understand the pros and cons of this. So that they can invest in better way.

Before investing in commodities, investors needs to understand the pros and cons of this. In India commodity trading is done on futures platform due to which traders and investors tend to get over-leveraged.

1. How does traders trade in commodities like crude, gold and sugar on exchanges?

One can trade in these commodities on exchanges by opening a demat account or a trading account with any broker who offers such broking.

2. They are the same brokers who also offers broking on equity?

No, they are not the same broker. But many who offer broking in equities have set up subsidiaries to offer commodity F&O broking. For this you need to set up a separate demat or trading account from your equity account if you desire to trade on commodities.

3. Is delivery compulsory?

Delivery is compulsory in most of the agriculture futures like edible oils and spices etc. The non-agri commodities like gold and silver are non-delivery based.

4. Is trading similar to that in equity F&O?

Yes, the trading is similar. In that market is settled on daily basis. However, the margins are not as high as on stocks.

5. What are the margins to trade?

Basically 5-10 percents. When the volatility jumps in agri commodities the exchange impose additional, special margins on long or short-side. So this can be as high as 30-50 percents at times.

6. Who regulates commodity F&O market?

Exchanges like metals and energy bourse MCX and agri bourse NCDEX are regulated by SEBI.

These are the few information which you should know before start trading in commodity. However, this is not it, there are numerous things and information available which an investor should know. Trading in commodity market gives you so many opportunities to earn great profit, but along with this it very riskier too.

Traders should do disciplined trading by creating and following some trading rules, only then one can make profit with less chances of failure. Commodities are traded in intraday trading also and so many traders are attracted to this, because here the trading is done with the purpose of earning profit and not for investment. Intraday traders also need guidance to trade, so they prefer taking tips from the best stock market advisory.

Before investing in market you should check everything and every single update of the market, only then you will be able to earn well and can avoid losses

I am interested in financial market so I wrote my article on the commodity market. The market is very interesting and once you understand how it works you'll like it too.