Options trading are one of the most important financial instruments in the above-mentioned market. These include the following –
- Call option
- Put option
These options are extremely flexible and help you to participate in the price movements. As a result of the same, you can easily undertake the Commodity trading India as per your requirement.
In the case of options trading, a trader can achieve high accuracy and outcomes. Similarly, the maximum losses in such a case are limited to the value of the options.
Categories of Commodity trading in India
The prime categories of Commodity trading in India include the following –
- Metals – These include – gold, silver, platinum and copper, etc.
- Energy – These include – crude and natural resources. Also included is gasoline
- Agricultural stock – Corn, soybean, wheat, rice, coffee, sugar, etc.
- Livestock and meat
Why go for Commodity trading in India?
Here are a few vital reasons to go for Commodity trading in India –
- It helps you to diversify your overall portfolio of investments
- Protects the funds during price rise and crashes
- It helps to protect the products during high inflation
- This allows you trade for lower margin to boost your profits
- Hedge against risks associated with natural calamities, disasters, wars and crises
Future contracts in Commodity trading in India
The biggest advantage of undertaking Commodity trading in India is that it is a future contract. This means that the quantity and price of the commodity is determined beforehand but delivery is in a future date. This helps traders to overcome price crashes and safeguard their products and profits.
This facility can be availed in all types of commodities being traded in the nation – to sustain liquidity. Undoubtedly, it is one of the best ways to start with commodity trading in India.
Similarly, commodity traders can also invest in Exchange Traded Funds (ETF) and Exchange Traded Notes (ETF) to overcome the price variations and earn suitable profits.
Starting Commodity trading online
For this, follow the below steps –
- Open an online trading and demat account
- You need a trustworthy broker to handle both accounts and to help you start with Commodity trading
- Identify the initial investment that you wish to make.
- The margin of such trade is often 5- 10 percent of the contract value
- Create a trading strategy and identify the commodity you wish to trade in. You can practice using simulation and hence create an ideal strategy for your needs
With these steps, you can initiate commodity trading in the nation.