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Learning the Basics of Commodity Trading in India


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Protocol for Commodity Trading in India

Commodity Trading In IndiaCommodity trading in India is a newly rejuvenated area of investing. 3 commodity exchanges have recently been set up in an environment that was previously devoid of commodity trading. Because this is a relatively new market in India, you may have some questions concerning procedures. Understanding these rules is critical to trading successfully.

 Minimum Investment for Commodity Trading in India

The minimum funds required to begin commodity trading in India is Rs 5,000. You can settle trades through delivery or through cash. If you plan on delivery, you will need to provide required warehouse receipts for storage of your commodity. You can choose to change between delivery and cash settlements up until the expiration of the contract.

 Choosing a Commodity Broker

There are several established brokers in this sector of investments. These include ICICIcommtrade, Refco Sify Securities, SSKI, and ISJ Comdesk. These brokers have all sought membership with the National Commodity and Derivative Exchange (NCDEX) and the Multi Commodity Exchange of India (MCX). You can find a more comprehensive list of brokers, including some that offer internet based trading.

 Who is Involved in Commodity Trading

There are 3 main players who will be involved in commodity trading in India—hedgers, arbitrageurs, and speculators. Brokers serve between the hedgers and speculators as intermediaries. Hedgers are producers or consumers who want to transfer the risk/price onto the market. Speculators are those who trade commodities based upon where they believe the markets to be heading.

This market is newly reopened in India. There are bound to be questions and issues that arise during the learning curve. You can research thoroughly to ensure that you are well informed before entering this market. Now is a great time to become involved in the growing area of commodity trading in India.

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