Commodities Trading In India

#1
Commodities Trading In India

http://economictimes.indiatimes.com/articleshow/1065463.cms

Trade pundits are betting big bucks on the commodity trade . And many believe that it would be the next big thing for investors. Surely, bigger than the stocks because globally the commodity trade is about three times the size of equities.

And in all this expectations of good times the Indian bourses can become the hotbed for global trading. Though Dalal Street giving Wall Street a run for the money, even in the near future, is still a dream. But judging by the way activity in the commodity market is picking up, it could soon rule the investors heart.

Heres a reality check. The Indian commodity market is estimated to be around Rs 11,00,000 crore, which includes agricultural commodities (rice, wheat, soya, groundnut, tea, coffee, jute, rubber, spices, cotton,
etc), precious metals (gold and silver), base metals (iron ore, aluminum, nickel, lead, zinc, etc) and energy commodities (crude oil and coal).

"The aspiration of a strong commodity market is based on the fact that commodities-related industries constitute about 58% of the country's GDP," says Jignesh Shah, managing director, MCX, a Mumbai-based independent commodity exchange.

Currently, the various commodities traded across the exchanges clock an annual turnover of Rs 2,90,000 crore, which includes the high-volume crude oil trade listed recently on the MCX. This figure can grow multifold with the introduction of futures trading and participation of more retail investors.

According to the commodity research site indiancommodity.com, the commodity market is expected to grow at an annual rate of 40% over the next five years. The lucrative commodity futures volumes touch $800 mn a day on an average. This is expected to grow at 100% every year. With FIIs eying the Indian markets in a big way, commodities can also gain unfathomable depth.

With a minimum investment of as low as Rs 5,000 and more than 42 traded commodities on offer for the investor, commodity trading is a hot option. The trading has been further boosted by the emergence of a highly evolved national commodity markets on the lines of NSE.

Besides the three national exchanges -- National Commodity and Derivative Exchange, the Multi Commodity Exchange and the National Multi Commodity Exchange -- there are 22 more exchanges and trading boards recognised by Forward Markets Commission (FMC), the market regulator.

Several high-profile equity brokers have become members with NCDEX and MCX. The names include Refco Sify Securities, Sharekhan, ICICI Commtrade, ISJ Comdesk and Sunidhi Consultancy, and are already offering commodity futures services. Some of them also offer trading through the Internet just like the way they offer equities.

With the WTO regime ushering in a new era in global trade, commodity trading becomes a global phenomenon as price issues cannot be manipulated easily, hence futures and options can be used in trading.

India being a major user of crude oil, (which is the worlds most traded commodity), edible oil and gold can become the hub of such commodities. Every year, India buys $25bn worth of crude oil, $8.5bn worth of gold and $9 bn of edible oils.
 

sh50

Active Member
#2
With a minimum investment of as low as Rs 5,000 and more than 42 traded commodities on offer for the investor, commodity trading is a hot option. The trading has been further boosted by the emergence of a highly evolved national commodity markets on the lines of NSE.
Issue is not the quantum of investment and the opportunities but the eligibility. The Refco sify representative in Delhi and my well placed IIFT friend have both confirmed that except for gold and silver, unless you know the others, you should stay away. Then what is the significance of this 42? Will someone please clarify.
 

SwamiNathan

Well-Known Member
#4
Cud someboby tell me Which is the best exchange (Liquidity main criteria) for commodities and which all commodities have trading Value - average- of more than rs.5 Crores per day. Pls.
 
#5
I have seen in past few days that Crude Oil futures have a decent volume at MCX. There's even high volatility specially in second session; that;s when international market is open.

With a minimum investment of 12000-13000 the daily range can make u earn/ lose 20-30% daily. Tooooooooo risky man
 
#6
hi
the karvy,share khan,refco,motilal,are the firms which deal in commodiite market trading.
want to trade in this market better to go for gold and silver first later you can shift.
 
#9
Dear all,

Whether it is equity or commodities, one has to trade carefully in futures. These future's product can make or break your investments. As of now we have only futures available in commodities with out any hedges.

I dont want to comment on number of commodities or liquidity etc as this is a growing market.

But I would suggest... one has adopt TRADE approach while investing in commodities. Trade approach means---- Before you invest your margin (which is otherwise your capital) one has to be clear about the loss that he can bear. For example, If i am invetsing 1 lakh, i should be clear about my loss such as 50000 or 30000 etc. Then, devide your maximum loss with maximum loss that you want to afford per trade. Ex. I am ready to take a maximum loss of 3000 per trade. That means I should take 10 trades. Assuming all 10 trades hit stop loss then I will loose, Rs.30000/-. If 50% trades hits your target of Rs.4000 to 5000/- per trade, then you will be in profits.

Unfortunately, Most of the positional traders ( Those who take one trade and wait for the market to come in his favour) have suffered huge losses. (loosing entire capital and going to debits)

I can write it on paper that this trade call approach will yeild profits.

Do not over expose yourself. What should I call, if anyone is coming to Commodity Markets with a margin of 5000 to 10000 margins and expecting profits of 5000 to 10000/- ... To my human sense it is called as betting or gambling....I dont call it as speculation as speculation is informed trading with sufficient investment margins. Unfortunately, small brokers are allowing investors (?) to over exposures. I see someone writing loosing of 20% in a single day. How can one loose 20% in a day when the average volatility is 2 to 3%. That means he must have taken 10 lots of Crude oil with a margin of 12000 to 15000...Crazy man.....Better these kind of people should buy lottery tickets rather than speculation.

My suggestions>

1. Minimum investable amount is Rs.50000/- ( for Agri Commodities), Rs.100000 ( for metals. - Gold 100g and Silver 5Kg, and Copper) and Rs.200000 (For 1 kg Gold and 30 kg Silver and Zinc)

2. Maximum affordable Loss (Stop Loss) per trade in Agri is- Rs.2500 to 3000/- in Metals Maximum Loss should be Rs.4000 to 5000

3. At any point of time, do not try to have more than one trade. Many people tell to diversify thier portfolio. With the above minimum investment it is not advisable to have more than one position

4. The moment you take position, please enter stop loss. A delay of 5 or 10 min would show you hell... ( We have experienced it during Chana Craashhhh and Silver Crash )

5. Always expect annualized return. If you dont have patience to annulize your returns and expecting weekly or monthly returns, please take out your money....As you are bound to loose your capital

6. If you are systematic enough with above points,... you can expect a return of 5% per month with a risk of your pre-committed loss ( i.e Maximum loss.... assuming 10 trades hitting stop losses thus loosing 30000 to 40000)

7. If you want to be conservative then keep your buy orders at day's low level and Short orders at Day's high levels. This will substantially reduce your stop losses. But only problem, is your trade might or might not get executed. You have to wait for your turn next day.

Final suggestion: MARKETS ARE THERE FOR EVER....BUT YOUR MONEY (INVESTMENT) MIGHT NOT.... ALWAYS TRADE WITH STOP LOSSES

Happy Trading

Nanabala
9986039019
Bangalore
 

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