A Complete Trading Guide In Commodity Trading

[docfij333]

hi , have been reading the post and its a boon for newbie commodity traders . A doubt here , how is the liquidity part of commodities ? if there are only few buyers and sellers will it come to a stage that we have bought futures and there is nobody to buy it and we will be forced to take delivery ?

Or is there a way we can safe gaurd against it?

 

[Kaboooooom]

This is lovely, thanks very much. However, I have a question regarding price movement per Rupee change. I am new to this and there seems to be various kinds of 'Series' in the Lots of various commodities. I am not sure, how much change will there be per rupee change in volume.
Could someone please list change in value of 1 lot per rupee change for the following heavily traded commodities. Thanks in advance.

Commodity Lot Series ChangePerLotPerRupee
Gold 1 Kg ??
GoldMini 100 Gm ??
GoldGuinea 8 Gm ??
GoldPetal 1 Gm ??
Silver 30 Kg ??
SilverMini 5 Kg ??
SilverMic 1 Kg ??
Copper 1 MT ??
CrudeOil 100 BBL ??

Please fill in the ?? with the Change per Lot Per Rupee. (E.g. If price of GoldMini change by 1 Rupee, the corresponding change per lot would be Rs 1 or Rs 10 or Rs 100).

 

[upen64]

thanks 4 d info

 

[DWeeP]

This is lovely, thanks very much. However, I have a question regarding price movement per Rupee change. I am new to this and there seems to be various kinds of 'Series' in the Lots of various commodities. I am not sure, how much change will there be per rupee change in volume.
Could someone please list change in value of 1 lot per rupee change for the following heavily traded commodities. Thanks in advance.

Commodity Lot Series ChangePerLotPerRupee
Gold 1 Kg ??
GoldMini 100 Gm ??
GoldGuinea 8 Gm ??
GoldPetal 1 Gm ??
Silver 30 Kg ??
SilverMini 5 Kg ??
SilverMic 1 Kg ??
Copper 1 MT ??
CrudeOil 100 BBL ??

Please fill in the ?? with the Change per Lot Per Rupee. (E.g. If price of GoldMini change by 1 Rupee, the corresponding change per lot would be Rs 1 or Rs 10 or Rs 100).

Found a very informative excel file on sharekhan's website -
http://www.sharekhan.com/Upload/Commodity_Upload/McxSpan.xls

daily updated. u ll get all info in it.

 

[DWeeP]

question: what are charges other than brokerage applicable for commodity trading ??
like transaction charges, stamp duty, service tax etc

It'd be gr8 if anyone will upload screenshot of his contract note (pls remove identification data)

 

[DanPickUp]

hi , have been reading the post and its a boon for newbie commodity traders . A doubt here , how is the liquidity part of commodities ? if there are only few buyers and sellers will it come to a stage that we have bought futures and there is nobody to buy it and we will be forced to take delivery ?

Or is there a way we can safe gaurd against it?

Hi docfij333

For safety reasons: Do not start trading in such low volume commodities unless you have the money and knowledge to do so.

Explanation in a nut shell:

If you bought the future at a certain level and then you want to sell this future and there is no volume=buyers, it is yours .

You are the owner of this future from this commodity and you will be the owner of this future until you can sell it with profit or with loss.

You not will be forced to take or bring physical gold or wood in to your depot if you own a gold future or a lumber future and it not can be sold.

It is a pure cash position which rises or falls in value compare to market moves.

You will be forced to give in advance margins, which is again cash, to the broker for each future you run. If you run out of this margin as you may have huge losses, you will get a margin call, which means you have to bring new money to your broker. There is one rule in trading which is not to be touched: Never get a margin call from your broker.!

Now let us make a live example in a nut shell to understand two ways of commodity future trading:

If you are a big farmer of grain and you sold this grain to the factory before harvest ( and that is how this business functions ), you will try to protect this fixed price over the future exchange to minimize your risk, in case some thing happens before or at the time of harvest and the price rises or falls immensely to your good or worst.

You ( docfij333 ) and most others on the other hand do not own a big farm ( Just my guess and nothing uncommon and if I told some thing wrong, I am sorry ) and you only will buy and sell the grain future to make profit on your invested money. Hope this makes the different clear.

All the best

DanPickUp

 

[docfij333]

Txx for thr info , i had expected it would be somethin like that only , thanks for taking the pains to explain in such lucid language


and yes , u r right i don;t own a farm :d

 

[shweta narang]

hello ,
hey i m new in commodity market ,can u suggest any website where i can see the live change in the prices of gold and silver and as well as the chart of margin value of particular metals.

 

[Relativity]

hello ,
hey i m new in commodity market ,can u suggest any website where i can see the live change in the prices of gold and silver and as well as the chart of margin value of particular metals.

yes, you should see mcxindia.com

 

[Rinchen Bhutia]

Excellent explanations. Please also clarify whether quoting trigger prise is based on market analysis or it is presumptious. Thanx

Hi Traders....

I am looking that lots of people are interested in Commodity Trading looking @ the returns it provide in short time.

This thread is for Beginers who dosent have any idead about commogity trading and also dont know how to trade in futures Trading!!!

Step1> U need to open an account with a broker who is Registered with MCX OR NCDEX.

Step2> After doing that, u need to select one or more than one commodities that u r interested in trading..
like, gold, silver, crude, guar, chana etc..

Step3> Now.... For a given commodity,, u have 3 to 6 contracts open that are identified by month and expires on a fixed date on that month. eg. gold sept,oct etc...

Step4> All u need to do is place an order either to buy or sell(u can do both without owing physical quantity).
Every commodity has a minimum trading size.
eg. gold has 100 gms(mcx) to 1 kg(ncdx), silver 30 kg, guar,chana 10 tons(1000 kg). There for u can buy/sell minimun one or multiple of tick size..

Step 5> Now the payment Funda..
Futures trading is purely margin based trading similar in stock market.. Every commodity has a specified margin value by the exchange that is to b paid by you for trading.
The margin varies from 5% to 20%. Exchanges do change the margin periodically when market goes too much speculative...

Step6> Example:
lets say..I want to buy ncdx Chana sept contract currently trading @ 1920 Rs per quintal. I placed buy 1 lot(minimum) that is 10 tons. so the total amount calculated is 1 lack 90 thousands for 1 lot. So u hav to pay your broker only 6% of it. that is roughly 12000 Rs per lot..

If u dont sell that day itself and hold it, than your profit and loss will b calculated on "CLOSING MARKET PRICE".
so if the contract closes say 1910. that is -10.. so u have made a net loss of 1000 Rs. Simply saying every 1 rs gain or loss counts to 100 Rs profit/loss. (buying an selling one lot will cost u roughly 170 Rs brokerage)

Step 7>profit and losses are autometically debit/credited in your account on daily basis.. If your margin amount has fallen short.. ur broker will rang u up for a cheque.

step 8> Dont forget to square off your posotions before the contract expires. Otherwise u may need to give/take physical delevery og the good or face a penealty by the exchange..

I think i have explained a lot of things.. If any reader still have any query.. can ask on this thread...
views welcome...
u can visit my thread in commoditis--->grains for few tips

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