Placing an order with your broker (i.e. the broker’s dealing desk) over the phone initiates the trade. The dealer gives a price and asks you to deposit the initial margin. If you remember, the initial margin can be 5–10% of the price, depending on the commodity and the exchange. Once you agree, the dealer places your order in the exchange trading system for the exchange to fill. You own the contract as soon as the exchange fills the order. From then on, your contract will be marked to market at the end of each trading day.
For more details, check our page on the Process Flow of Commodity Trading
There are three ways to settle trades:
During the Tender period, you inform the exchange and the counterparty that you wish to take delivery of the commodities. You then pay the entire amount (not just the margin). Once the payment is credited, the seller will deliver the commodity.
Usually, future prices remain higher than the spot price. This is because of the time factor—time compounds value. This scenario is called the Contango. In case the spot price is higher than the futures price, then it is called Backwardation.
To sell a ‘Contract’, you do not need to own the commodity. Just refer to the regular Sell Order process.
However, if you are referring to AGREEING to SELL, then you need to own the commodity. This is because only the buyer has the right to decide whether need a physical delivery or would prefer a cash settlement.
Please follow the steps below to transfer funds from your bank account to your commodity trading account:
Once you have transferred your funds, log into your Kotak Commodities trading account at www.kotakcommodities.com. Then, head over to the My Account page and then click on the ‘View My Ledger’ button.
Once you open your Ledger, you can see the option ‘Select Type’. Click on this and choose ‘REC’. This will show you the details of any fund transfers from your Bank account to your Commodity Trading account.
You can also opt for the ‘PAY’ option (instead of the REC type). This can help you view the fund transfers from your Commodity Trading account to your Bank account.
Yes, you can. Delivery is not mandatory.
However, there is always a provision for delivery in commodity trading, to ensure that the future price is in conformity with the underlying.
The right to delivery depends on the terms of the contract you have entered. In other words, it depends on whether it is a Compulsory Delivery Contract, Seller’s Option Contract or Both Option Contract.
No, you don’t have to. GST is only applicable on delivery-based trades. For such trades, tax is charged at the prevailing tax rate in the state where the delivery is to take place. Collecting and paying GST is normally the seller’s responsibility.
Only if you are opting for physical delivery. This is because you will need a GST registration number for the State the commodity is being delivered to. Alternatively, you can appoint a GST agent to ensure compliance with the state’s tax regulations.
You will have to deposit a minimum margin of Rs 30,000 to start trading. The margin must be in cash.
You can place the following types of orders:
You can place this order at the time of placing a fresh buy/sell order or when placing a square off order for a commodity. If you want to know what a Stop Loss order is and how it works, refer here.
Trigger Price Range
Market Price < Trigger price < or = Order Price
Market Price > Trigger price > or = Order Price
A Stop Loss order is forwarded to the exchange when the market price hits the trigger price. The order gets traded at a price between the Trigger Price and the Order Price.
You can place an AMO by logging on to your trading account on www.kotakcommodities.com.
The AMO must be placed within a price band of +/-2% of the commodity’s last closing price. AMO’s placed outside this band will not be executed.
AMO’s are placed in the market according to their bid price. Market Orders are placed first, followed by other orders, in ascending order. Market Orders are orders that are place at a price of 0 as there is a possibility of getting a freak rate when markets open.
Before placing an AMO, please ensure that your margin account has sufficient balance. Your AMO will get cancelled before reaching the market if your margin balance is found to be insufficient at the beginning of the day. Please go to Order Report on the website during market hours to check your order status.
It is advisable to place Limit Orders instead of Market Orders because Limit Orders are placed at a price slightly above or below the previous closing price.
Example : Assume that the closing price of Gold Mini futures on 05/08/2016 was Rs. 29,500. You placed an AMO Market Order (i.e. at a price of Rs. 0) to buy 100 grams of Gold Mini. If your AMO is the first buy trade to hit the market on 06/08/2016 and the first sell trade to hit the market is at Rs 30,000, your order will be executed at Rs. 30,000. This would be a very expensive purchase for you. You could have avoided it by placing a Limit Order.
If you are a Kotak Commodities online trading customer, you can do commodity trading over the telephone by calling 1800 102 6776. You can call this number from anywhere in India, without incurring any long distance call charges.
You can get live market rates for all commodities by calling our Call & Trade number. And then, place the orders you want through the phone call.
If you want to confirm these orders, please check with the Call & Trade dealer. You will not be able to confirm the orders placed on phone from our Customer Care. These will, however, be reflected in your order book on the Kotak Commodities website.
For free commodity research reports and recommendations, login to your trading account and follow this path: www.kotakcommodities.com > Commodity > Research a commodity.
You can use this facility to verify whether your commodity trading order has been executed or not. You can also use this facility to change/modify your pending orders.
On placing a commodity buy or sell order through your online commodity trading account, you will be led to a new screen. This screen will have your order details and order reference number. It will also contain the ‘Check Order Status’ link. On clicking this link, another screen will open. On this screen, you can see whether your order has been traded or not.
In case your order has not been executed yet, the screen will reflect your order status as ‘Open.’ You may have to wait a while for your desired price to come. The order will be automatically executed once your desired price level comes. If the price level doesn’t come during the day, your order will expire.
You can also use this link to modify or cancel a previously placed order. But this can only be done if your order is still ‘Open.’ You cannot change or cancel an order once it has been executed.
You can activate/de-activate your commodities market SMS Alerts by contacting our Customer Care representative on 1800 102 6776. You may also contact our representatives on the same number if you want to modify the mobile number on which you receive the SMS Alerts.