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Certain
commodities used in our day-to-day existence,
can double up as investment avenues. The wheat
used for our breakfast breads, the gold that adorns
our watches, the silver in our jewellery, are
just some of the commodities traded on popular
exchanges worldwide……
What
are Commodity futures?
Commodity
Futures are contracts traded on exchanges, that
allow the participant to buy or sell a certain
commodity at a certain traded price for future
delivery.
Both
buyers as well as sellers can choose to liquidate
the contract by cash settlement of the price difference
between the contracted price and the liquidated
price on or before the last trading session of
the contract month.
In
case of future settled in delivery, it is the
sellers option to give delivery.
Futures
contracts are mostly cash settled and globally
only 1% to 5% of exchange traded future contracts
are settled in delivery.
Where
are Commodity futures traded?
Commodity
futures are traded on four National Multi Commodity
Exchanges
==> NCDEX MCX NBOT NMCE
Future
contracts are available on which commodities?
The
Multi Commodity Exchange, NCDEX(National Commodity & Derivatives Exchange
Limited),trades futures
contracts on more than 40 commodities including agro-products (sugar, wheat, rice, urad, chana, masoor, cashew, coffee, parboiled/raw
rice, pepper, turmeric, gur, tur, wheat, yellow
peas ), precious metals (gold & silver), industrials
(cotton, rubber, guar, castor), oilseeds (soyseed,
groundnut, mustard seed), edible oils (crude palmoil,
soyoil, mustard oil, groundnut), base metal (mild
steel ingots, sponge iron, copper cathode), energy(furnace
oil, brent crude oil) with compulsory physical
delivery on most of them, having trade volume
of around 5,000 Crore per day, making it India's
biggest and widest online trading platform. Sunita
Global Ltd., is an Authorized Member of NCDEX
offering the Online Trading Platform at your door
step on paying a nominal amount as margin money,
for doing trade for your self and others and giving
an opportunity to make money out of the directional
movements of price.
Who
should trade commodity futures?
Investors: Looking for asset
diversification from the traditional equity bonds
portfolio.
Traders:
Wanting to benefit from directional movement and
volatility in commodities.
Commodity
producers: Farmers, miners, plantation, owners,
can sell futures contracts of the commodity produced/mined
to lock in a selling price.
Commodity
users: Commercial users of commodities can buy
futures contracts of the commodity input to lock
in a purchase price.
How
to start trading commodity futures?
Choosing
a broker: Find a broker that has membership
to exchanges that trade in the commodity of your
interest. Verify the credibility
Depositing
the margin: To open a commodity futures
trading account, one has to deposit margins with
the broker. The amount for initial margin is solely
your discretion, as per the trading limits required
by you.
Commissions: Commissions costs
may vary from one brokerage firm to another. For
commodity futures, the commission is normally
charged “per-side” separately.
The
trading plan: Futures are long-term investments
that you can just buy and forget. They require
monitoring on a daily (or even an hourly) basis
because of the large impact a small price move
can have on your account. Your broker is a key
in helping you to develop an appropriate trading
plan and to stay alert to important market changes.
Commodity
trading business
Commodity business is an ordinarY phenomenon of
Demand & Supply. Here, Minimum margin works
as a significant tool. Changing climatic conditions
& atmosphere give the indication of increasing
or decreasing demand and supply. Indian commodity
exchange is an indicator of both Commodity prices
and Currency Rates of India.
In
this trade, any trending market is making money
for someone, so you can have a piece of action
too. You can be a bull or a bear as the mood suits
you. There is almost a buyer if you want to sell
and almost a seller if you want to buy. You can
be a happy bull or bear if you are with the trend.
It’s a free marketplace, where you can live
by your wits and reap the fruits of your labor.
Commodity
business keeps a golden future in India and guarantees
the scope of expansion of business and a good
income yield. Many big business houses find this
attractive because in this way they can fulfill
their needs of Hedging, Speculation & Arbitrage.
Estimation indicates that volume of around 5,000
Crores or more is traded on a single day on NCDEX.
Taking entry into this business at a right time,
with a good brokerage rate and good marketing
skills can boost your current business situations.
Connectivity
through Internet
There is practically zero delay in price updation
and contract submission. You can take back-up
online. There is easy mobility of trading anywhere
even while traveling.
Support
by SGL
Research
Report:
SGL provides you with world class research reports
on the commodities traded on NCDEX which will
provide you assistance as to how to invest your
money.
Accounting:
We provide centralized accounting system to our
Franchisee wherein all back office processing
is done at head office made available to the traders
through E-mail.
Client
Margining and Trade Limits
The margin and trading control on clients is exercised
by the Head Office in consultation with the respective
Franchisee.
Deposit
/ Margin Requirement
Gross Exposure permitted at a time 10 to 20 Times
(depending upon the commodity traded)
Mark to Market loss permitted 75% (Mark to Market
loss will be collected daily)
Other
Charges
An amount of Rs.10, 000 will be charged per annum
for the issuing and usage of a User-Id from the
Exchange .
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