Trading in Commodities.

Hello Members,

I request the learned members of this forum to answer the following questions about trading in commodities. I am a newbie and trying to learn as much as possible.

1. Incase of a "buying" a commodity such as "Copper" the lot size is specified as "1MT [1 Metric Ton]". And the price it is traded for is "1KG[1 Kilo Gram]". Say the price of 1KG copper is Rs. 190. Does this mean, one should have 190 *1000 in his account to buy 1MT, the minimum lot size, without using margins?

2. How are you senior members trading, using the "Margin" for such commodities. Can you please give an example in case of profit and loss?

3. I have TradeTiger account, can we shortsell commodities with this software?

Regards,
-Sri

Hello Humble,

Gold LOT size is 100 which means each point move = 100rs. Therefore a profit of 10 points is 1,000rs profit.

Copper is 1,000 therefore a profit of 10pts is 10*1,000 Rs

Hope that helps
Regards,
MJ-

Hi MJ,

Thanks for the reply.

I am still stuck with placing a buy order [I am sorry for really dumb questions - I could not find anything googling.]

To buy Copper at Rs 190 for 1KG [1MT = 1lot] or Gold at Rs 15000 for 10 GMS[1KGS = 1lot], what is the amount i need to have in my Trading account? [Without and With using Margins.]

Regards,
-Sri

I agree with you
i also trade in gold & silver like this only

Without taking margins into account, the lot size in Ruppee terms for Gold is 15000X10=Rs 1,50,000/- and that for copper would be 190X1000 = Rs. 1,90,000.

The margin required for comodities are normally around 5% with variation depending on various factors. The exact margin requirement detail is provided by the broker and it changes on daily basis, depending on the volatility and the close price.

For gold mini its about 8k I think, one lot. Find the margins required on these commodities. Multiply gold CMP by lot and then get the margin %
so,
15,000* 100 = 1,500,000
1,500,000 *3% = margin amount

Not sure about the margin percentage, do check with your broker.

MJ-

MJ and Kapil,

Thanks a lot for the answers. I have understood the buy order now.

If the Copper price is 190 for 1kg, to buy 1 lot, i need to have:

190 * 1000 * Margin Percentage[My broker = 9.5%] ie:

190 * 1000 * 9.5% = 18050

So if the price goes up to 195, the total value will be:

195 * 1000 * 9.5% = 18525

And in this case, i would make a profit of Rs 475 for 1lot without considering the brokerage. Please do let me know if this is correct.

Thanks in advance .

Regards,
-Sri

If the price goes to 195 from 190, you gain 5 * 1000 = 5000...

For calculation of profits its your sell price - buy price. Here you don't have to take the margin %ge into account. So, if the price goes up by Rs.5/- for copper, its Rs.5000/- profit as mentioned by pakatil.

Kapil, again thanks a lot ..

If you dont mind, when you have time could you please post a sample trade?with Buy/Sell and Profit/Loss including the brokerage in your case.

I am sorry for asking such basic questions, but i hope it would be very helpful to a lot of newbies .

Regards,
-Sri