In simple words commodity term is used to signify a material or good a place where we buy and sell these goods is known as the commodity market. Similar to Stock Market, Commodity trading is a category of trading that allows people to trade or exchange physical substances, goods, and resources. Before investing in any commodity, you should analyze or research the market regarding the raw material’s demand and supply chart.
On the safe side, investing in gold, coffee, steel, gasoline, Crude Oil, agriculture will be beneficial for the commodity traders.
Commodity Trading process, advantages and disadvantages
MCX is a Multicommodity exchange of India Ltd. MCX trading facilitates you to trade in various metals (Silver, Gold, Led, Copper, Zinc, Crude Oil) securely and transparently.
Commodity trading is very advantageous to investors that have a minimum budget to trade. It will allow maximum benefits in a very short period. You can easily make an entry and exit from the commodity trading market.
To do commodity trading you also need a Demat and trading account to keep the digital status of transactions and commodity types.
Commodity trading is risky so be very careful while choosing any goods material. Because every good material has its expiry date and after the end of the period it is not beneficial and does not return the great cash value.
Process of commodity trading
It is easy to trade in commodity trading.
- Contact the broker for a commodity trading account.
- Decide market type, in which market you want to trade.
- Take the decision to buy or sell
- Set trade size.
- Use stop-loss orders to set the risk capabilities.
- Place trade and monitor position to determine the profit and loss flow.
- Perform close action when you want.
No matter which trading market you chose, to be a successful trader you should have a sharp mind and analytical skills that can calculate the flow of the market and make the decision accordingly.
There is majorly two types of commodities are being traded, First is metals (MCX Market) and second is Agri commodities (done in NCDEX Market). Few of samples are as follows:-
- Silver Trading
- Gold Trading
- Zinc Trading
- Copper Trading
- Trading in Crude Oil
- NICKEL Trading
- LEAD Trading
- MENTHAOIL Trading
- ALUMINIUM Trading