Investing in Commodities for profit from MCX

Click here to Enjoy Live SHARE MARKET Commentary and for NSE & MCX

 

Commodity market is a place where the trading between different commodities takes place. Transactions are made to buy and sell commodities. In initial times, the only place where this trading used to occur was among agricultural commodities. But today, because there has been a lot of improvement, advancement and development in the technology and industrialization, all kinds of commodities are being traded these days. Globalization has made this possible.

However, the investor or the trader should always be alert in the trading market to earn profit on the commodities. Make sure that the trading that is being done is on standard products only. Also, it’s better to do futures trading rather than doing on the spot trading as it involves a little less risk. Also, a thorough knowledge of the market is extremely important. A trader should always be informed about news of the trading market, so as to limit the risk on every transaction. Experience and knowledge about the commodities highly matters in this market.

Things to do:-

• You should define certain limits to yourself and also make them strict enough so that they can take a stand for defining your damage.

• You cannot just start trading anytime you wish to. You should keep a watch at the trading market and check the commodities you want to trade in regularly. Only when you see it’s the best time to trade in them, you should go for it.

• When a market starts increasing, it follows the same way for certain duration of time. So, it’s better to plan according to the pace of the market and do not change your way of reaction every now and then.

• It’s better to hire a good consultant who is qualified enough to guide you with the investment opportunities if you are not able to understand the trading market yourself. Always look for a good advisory firm for the same. Try to judge them before you start following them. Try talking to them and then based on their experience, reputation and accuracy level, hire them and start taking their advice.

• It is also advised not to change your advisor frequently. Even if you have suffered a slightest loss on some commodity, try to bear it as he can make you earn better with other commodities. Some time the trading market fluctuates unknowingly as it is a highly volatile place. Since he has studied your portfolio and companies condition, he will give you the best advice with the other commodities.

Today, commodity market is more in demand than the stock market because of the instability in worldwide stock markets. It’s better to understand the commodity market carefully if the trader has earlier been investing in the stock market.
Key points to invest in commodity market:-

• The first rule that the trader should follow while investing in a particular commodity is to read its demand and supply history. It is very essential to know about these things as the price of the commodity highly depends on the trends of these two things. To know more about it, one can simply read reports and articles on production and consumption of a particular commodity he is interested in. Check this kind of information for commodity for at least 3 years so as to get a hang of the trend.

• The next rule is to check the recent updates of the commodity. Evidence of aging technology and production techniques, new explorations etc should always be observed properly. This kind of information plays a vital role in increasing or decreasing the price of the commodity. This will help you in understanding the trend of the commodity and will help you in deciding whether you should continue with it or not.

• It’s better to buy and hold on to the commodities till the time you can. You need to keep it for the long run till the time you see a change in the behavior of the market or the trend of the commodity. This will help you in earning good profits on the same.

• Also, you should always keep a watch on the weather phenomena. You should always follow nature and make it a strong point that you never go against it.

 

Click here for Indian stock market tips