About Commodity Market

Commodity Market in India (Exchanges)

MCX started Commodity trading on 2003 in India, and the MCX online facility was pioneered on the same age. Today, apart from numerous regional exchanges, India has six national commodity exchanges namely,

  1. Multi Commodity Exchange (MCX),
  2. National Commodity and Derivatives Exchange (NCDEX),
  3. National Multi-Commodity Exchange (NMCE) and
  4. Indian Commodity Exchange (ICEX),
  5. Universal Commodity Exchange (UCX) and
  6. ACE Derivatives exchange (ACE).

The regulatory body is Forward Markets Commission (FMC) which was set up in 1953. As of September 2015 FMC was merged with the Securities and Exchange Board of India(SEBI). After this merger SEBI has been ordered to exit many commodity exchanges.

Trading Stocks/Commodities in these exchanges requires standard agreements (KYC)as per the instructions so that trades can be executed without visual inspection.

Commodities traded include -
  1. Metal - Aluminium, Aluminium Mini, Copper, Copper Mini, Lead, Lead Mini, Nickel, Nickel Mini, Zinc, Zinc Mini,Brass(futures)
  2. Bullion - Gold, Gold Mini, Gold Guinea, Gold Petal, Gold Petal ( New Delhi), Gold Global, Silver, Silver Mini, Silver Micro, Silver 1000.
  3. Agro Commodities - Cardamom, Cotton, Crude Palm Oil, Kapas, Mentha Oil, Castorseed, RBD Palmolien, Black Pepper.
  4. Energy - Brent Crude Oil, Crude Oil, Crude Oil Mini, Natural Gas.

Investment in Commodities

The best way to invest in commodities is through a Commodity futures and options contract, which is an agreement to buy or sell a specific quantity of a commodity at a set price at a future time. Futures are available on every category of commodity. Trading in commodities involves high risk for the amateur investors.

What are the advantages and disadvantages of future trading?

Advantages of futures:
  1. Futures are highly leveraged investments
  2. Future markets are very liquid
  3. Futures give huge profits, if traded carefully
  4. Affordable minimum-deposit accounts and controlled full-size contracts
  5. Long or short futures can be set as target easily

Disadvantages of futures:
  1. Margin trading
  2. Futures markets are volatile
  3. Direct investment in the markets is of high-risk, especially for new investors
  4. Gains and losses are magnified by leverage
  5. Unpredictable movement of trade even before you close your position

More than 100 commodities in India are traded in the commodity futures market. Out of these, 50+ commodities are actively traded.

What is option trading in MCX?

It’s about securing hedge positions to save your futures from any possible loss out breaks.

On buy Side : Futurue –Long

Option- Put

On sell Side : Future – Sell

Option- Call

This is only a naive trade set up with hedge.
with option all lot of other strategies can be placed in commodity market, like future & options market in Stocks.

How it is done in commodity?

Its done same as in Stocks , Strategies may differ but technicality of the trade set ups are same.

What are the advantages and disadvantages of option trading?

Advantages of option
  1. More complex trade setups
  2. More assurance to capital locked
  3. More trade opportunities
  4. Less capital compared to futures if trading options
  5. Less complex than stocks ,commodities are relatively easy to understand
Disadvantages of option
  1. Risk is flat high
  2. Theta decay can be higher

International Commodity Market

There are two major exchanges in the world (London Metal Exchange) LME and COMEX a division of NYMEX(New York Mercantile Exchange). They handle almost all Metals and Energy scripts traded.

Impact of International Commodity Market in MCX-India

  1. Unlike equity market, commodity market would have less influenced by domestic events. Which have a very small role to play in commodity market. Commodity markets are largely influenced by Data releases from US, European countries, China (Major metal consumer/producers), and Chiele.
  2. Unlike equity market, commodity market would have less influenced by domestic events. Which have a very small role to play in commodity market. Commodity markets are largely influenced by Data releases from US, European countries, China (Major metal consumer/producers), and Chiele.
  3. Demand and Supply is also affect Indian commodity market. More demand leads to more price rise. Some events like labor strikes at important strikes, environmental issues, Geopolitical situations etc will change Demand supply ratio. You can analyze the inventory data that released by London metal exchange in daily and weekly basis.
  4. Jobless Data releases from United States are a major factor that affects all scripts in MCX commodity market and dollar. It affect badly if the unemployment is higher.
  5. When Crude oil inventories release on Wednesday (commonly) it will instantaneously affect crude oil price. Likewise, Natural Gas inventories release on Thursday (commonly) will also make instant effect on Natural Gas prices.

MCX ferrous and nonferrous metals and energy commodities price changes always depends on the corresponding international prices, conversion of USD to INR, and demand/supply. Now let us check how these type of factors affect MCX trading.

When the US dollar being strengthened or weakened commodity price would rise or fall respectively.This type of USD to INR conversion rate will create sudden price fluctuations in the market. And in sometimes the international commodity price would have rises and in Indian market commodity price would have drop and vice versa. Also there may be some volatile movement in the price without any such dramatic change in their international counterpart. In order to conclude whether to buy or sell it is always better to know the international prices and USD to INR rate conversion.

What we are

When it comes to commodity trading in India, finding the right broker is of important. We Green India Commodities Pvt. Ltd serving an unique in technology to get commodity market live price through our online trading platform includes Mobile Application (Mobile App), Web Application(Website Trading). We are Best Commodity broker in Indian Trading Company

We are constantly implementing new ideas to make investing a smooth and simple experience. We are the discount broker in India and we continuously strive to empower the retail community by sharing knowledge, providing superior tools (MT4 Chart with non re-painting Indicator).

Our Services
  1. We are offering to open the Online trading account at free of cost (Free account opening charges).
  2. We are providing unlimited exposures (in intraday market)
  3. Trading Tips : Intraday Stock/Commodity tips (especially we are focusing the Crude Oil tips, Natural gas Tips, Gold Tips and Siver Tips with more accuracy) and alerting the clients before two hours from the time of inventory to complete the transactions cautiously.
  4. Conducting free seminars to educate each and every investors to better understanding the risk involved in Commodity market as well as to predict the market in their own knowledge.


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