How does commodity market works in india

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With commodity trading, using leverage is much more common than with stock trading. This means you only put down a percentage of the needed money for an investment.

The contract will require you to keep a minimum balance based on the expected value of your trade. Small price moves lead to big changes for your investment return, meaning your potential for gain in the commodity market is high but so is your potential for losses. Commodities also tend to be a short-term investment, especially if you enter a futures contract with a set deadline.

This is in contrast to stocks and other market assets where buying and holding assets long term is more common. With stocks you primarily make trades during normal business hours, when the stock exchanges are open. You may have limited early access through premarket futures, but most stock trading occurs during normal business hours. Overall, commodity trading tends to be more high-risk and speculative than stock trading, but it can also lead to faster, larger gains if your positions end up making money.

Before making any trades, you need to carefully understand the commodity price charts and other forms of research. Since market price moves can lead to large gains and losses, you need a high risk tolerance as well, meaning you can stomach short-term losses in pursuit of long-term gains.

And if you do invest in commodities, it should only be a portion of your total portfolio. Like with any decision, consider speaking with a financial advisor to see if investing in commodities is right for you and to get help on which strategies you should use. Was this article helpful? Invalid email address Submit Thank You for your feedback!

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Before writing full-time, David worked as a financial advisor and passed the CFP exam. Trade in future contracts happens electronically, and the contracts can be settled in hard cash. Commodity futures contracts are contracts for delivery of goods. You can get delivery of goods against commodity futures contracts if there is sufficient delivery logic in the contract design. The ICEX not just allows trading in agri products, plantation rubber , fiber jute , but also commodities like diamonds and steel.

You can catch all the action about commodity future live during the trade hours. There are two sides to the same coin. Commodity trading has its own advantages and disadvantages. The advantages include commodity futures are highly leveraged investments, which means with a relatively small amount of money you can take a bigger bet. Commodity future markets generally are very liquid, which means entry and exit are easy. Commodity futures can potentially give huge profits, if traded carefully and smartly.

The disadvantages of commodity futures trading are that markets are volatile, which means risk is higher. Direct investment in the commodity markets is of high-risk, especially for new investors. So, be careful. Gains and losses are magnified by leverage, which means you win big or lose big. Investors looking at commodity trading opportunities will get commodity updates in various places. But, instead of looking at the entire internet for information, use Nirmal Bang's reports and calls.

Key commodity updates future regarding price and delivery will help you spot potential trades. Traders pay commodity transaction tax CTT. In the commodity sector, GST is paid on brokerage on physical delivery of goods and on exchange charges and warehouse charges.

There is also a stamp duty.