How Commodity Trading Works?

Do you think that prices of gold will go up further or crude oil prices are going to fall? You can try entering the commodity futures market if you believe that these predictions have a good chance of coming true. Commodity markets have changed a lot since the age old time and today, fully computerized commodity exchanges – NCDEX and MCX have been set up. If you decide to buy gold today sell gold at a profit after some months then you have to be sure that the gold you buy is pure,  would also need a secure place to store and many more such hassles. Alternatively you can buy gold futures from commodities exchange if you want to invest in gold. Whenever you buy a gold futures contract, you will have to consider the following three points:

1.       Buy the amount of gold specified in contract.

2.       Buy it at the price specified in the contract.

3.       Sell it on the expiry of the contract. You don’t have to worry about actually buying the gold if you sell the gold futures contract before it expires.

We all know that stock futures prices or stock prices are quoted on a daily basis in the stock markets and it is the same way commodity futures prices are quoted on the commodity exchanges.

Margin - you just need to pay a fixed percentage of cost and not the entire amount while you buy a futures contract. Margins are much lower in commodities trading and thus it is cheaper as compared to stocks. You can analyze the commodities that are offered for trading, their contract size and other criteria by getting onto the commodities trading exchange – NCDEX and MCX

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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.