How to Trade in Commodities Market

You are now familiar with the basics of commodity trading in India. In this section, you will learn how to trade in commodities using the knowledge gained so far.

Commodity trading in India is much easier now than it used to be. Nation-wide multi-commodity exchanges, such as NCDEX and MCX, provide investors an easy, safe, and hassle-free platform for commodity trading. These exchanges have electronic settlement systems that allow you to trade at just the click of a button, from any location. You do not even need to possess the commodity physically. You can simply make a trade and pocket the profit upon squaring it off, without the commodity changing hands. Thanks to electronic trading, physical delivery of the commodity happens for less than 1% of the total trade volume.

Trading in commodities involves three simple steps, regardless of which exchange you are trading on. These steps are:

Process Flow in Commodity Futures Trading


Process Flow in Commodity Futures Trading



Let us now look at these steps one by one. The next chapter deals with the first step—how to choose a commodity broker.


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