Steps to Invest in Commodity Market

Futures trading in Commodities have emerged as a major investment option in India during the last few years. In recent times the performance of the commodity futures market is similar to that of the stock market. Some analysts even predict that the commodity futures markets may overtake the capital market based on trade volumes. However not many investors know how to benefit from trading in various commodities because the commoditiesfutures market is a relatively new entrant in India.

Following are few of the steps that will help you to make an investment in the commodities futures market:

1.       Initially you will need to locate a brokerage house with a good reputation and effective service record.

2.       Thereafter you will need to fill an account opening form with the selected brokerage house that is registered with SEBI and a member with any of the National Commodity Exchanges.

3.       While opening the account please read the Risk Disclosure Document (RDD) and the Rights and Obligations documents of the stock broker member and client amongst others in order to be very clear of the rules and regulations that will govern your trading in the commodity futures market.

4.       Choose the correct brokerage plan very carefully based on your pattern of trading and do not get carried out by freebies.

5.       You will need to read between the lines and be crystal clear of the service deliverables by the stock broker.

6.       Once your account is opened please take time out and attend seminars conducted by the Commodity Exchanges and SEBI which focus on the markets and investor protection.

7.       You must choose a stock broker with a good track record in commodity research as this will aid your investment and trading decision in commodities.

8.       Allocate money for investment in commodities market and make a commodity wise allocation of your fund based on liquidity and depth of the market which will lead to diversification of your investment portfolio.

9.       Ensure that you pay the Initial margin upfront and top up your account balance based on the MTM being incurred on a daily basis.

10.   While trading you must be clear on your exit level and at all times place stop loss orders as this will ensure protection of your capital and continuity in the commodities futures market.

Founded in 2005, ABans Group has grown from being a trading house to a dynamic and diversified business group. We provide expertise in Broking Services, Merchant Banking, Non-Banking Financial Dealings, Gold Refining and Realty and Infrastructure. In a nut shell Abans Group is a comprehensive Financial Services and Solution Provider, which aims to provide an end-to-end financial solution to all its clients.