MCX Trading – A Good Investment Option to Better Return

As BSE or NSE shares of the companies are traded similarly at MCX (Multi Commodity Exchange) or NCDEX (National Commodity and Derivative Exchange) commodities are traded. MCX was set up in Nov. 2003 under FMC which was merged with SEBI and now comes under the regulatory preview of SEBI.

One can start commodity trading with a low amount as INR 5000/-. Since you will be investing your time and capital it is better to start with around INR 50,000/- in your pocket. It is a sufficient amount for beginners to start trading. Before we move further let me tell you not to trade with borrowed money, trade with the surplus amount so that even if you lose it should not make any dent in your financial standing. Remember that your invested capital will be at risk and there is no guarantee that you will only profit from it.

Investing in commodities without understanding is a risk and a bad idea to lose hard earned money. So first understand what commodities are and how they work.

Commodities markets throughout the world are the foundation of the global trade system. Profits can be made if the trader has a good knowledge of the issues that drive commodity prices and understands the underlining facts how one should trade on it.

A commodity is a raw material or basic goods that individual or institution buy and sell. They are the foundation blocks for more complex goods or services.

A commodity trade takes place either in the spot market or futures market. As the name implies, in spot market trade is in exchange for cash or commodities and happens immediately. In futures, market trade is based on standardized contract. It is not necessary to accept deliveries of goods. Trade happens in electronically and contracts can be settled in cash.

Generally speaking, commodities can be divided into four categories and are further subdivided. The categories are agriculture, metals, energy and environmental.

Agriculture includes food crops (cotton, soya beans, corn, etc.), livestock (pork bellies, hog, cattle, etc.), and industrial crops (wool, lumber, rubber, etc.).

Metals include precious metals (gold, silver, platinum, etc.), base metals (iron, aluminum, copper, nickel, steel, lead, zinc, etc.)

Energy includes petroleum products (crude oil, heating oil etc.), natural gas, uranium, ethanol, electricity, etc.

Environmental includes renewable energy certificates, carbon emissions, mining, etc.

As with any other investment options, commodity market also carries risk. To reduce and spread risk it is better to invest in various commodities in the same category, that is diversification of your portfolio. If you get right guidance and accurate tips from the experienced analyst you are bound to gain. It should be noted that stock and commodity market function differently. In commodities, there is a lot which one buys, no such thing in the stock market.

It should be noted that MCX has higher volume compared to NCDEX. MCX specializes in precious metals; NCDEX specializes in agriculture and other categories. Online tradingcan be done on both the exchanges. Your trades can be accessed on laptop, computers, and smartphones. That is you can trade from anywhere, from home, office, during your journey or on a holiday. The transactions are seamless and the complete process of transfer of funds without any error and within a short duration.

To avail tips on commodity trading, you can contact us or fill out the online form…. Happy Trading…..