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Would you believe it if I told you that Lead, the metal Lead played a part in the fall of the Roman Empire? Lead, which can be found in abundance, is more valuable than Gold or Silver.
You don't have to worry, I'm not going to teach you any history lessons. But lead and the Roman Empire do have some similarities, so I would like to share this fascinating information with you.
I won't be taking too much time, but here is an interesting perspective on how lead might have been a catalyst for the fall of the Roman Empire.
Lead is a rare metal because of its unique characteristics.
Lead was discovered in prehistoric times and has been used since then. Lead is actually the oldest metal to be discovered. This is evident in lead figurines from Egypt, which date back to 4,000 BC. The Roman Empire was perhaps the most prominent user of lead, and thus the peak in lead production. Romans used lead extensively as water pipes and aqueducts as well as tank linings, cooking pans, and cosmetics.
Here's a picture of a Roman-era waterpipe.
It was believed that water pipes could be run directly into a residence during the Roman era. This would permit water to be piped directly. To show the aristocratic status of the owner, the name of the pipe was inscribed. These are custom water pipes. The Romans paid the price for their excessive use of lead gradually. Unlike iron, lead is not useful for the human body. It is toxic and can cause cancer. It is especially dangerous when used in water pipes. Many people died from lead poisoning, especially those in higher ranks who were involved in decision-making. It is believed that this mass death played a key role in the collapse of the Roman Empire.
Since the Roman period, humans have progressed and lead has been better used. There are many uses for lead.
Many people associate 'lead with pencils', and instantly think of the pencil lead at the pencil's tip. It is not lead. It is graphite.
You can see the data below to see how the supply-demand ratio for lead has remained stable over the past few years.
The price of lead has remained relatively stable over the years. Take a look at Lead's long-term chart; pay particular attention to the past few years.
(image)
Trades in Lead futures on MCX must be based on price action. Personally, I wouldn't recommend setting up trades based upon news or fundamentals about Lead.
Let's have a look at the contract specifications. Lead to is available in two versions, Lead (big contract) or Lead Mini. Let me first list the contract details for the large Lead and then we will look at Lead Mini.
These specs are available as follows -
Here's a snap quote from the Lead contract that expires in January 2017.
As seen here, the price is Rs. 137.05 per Kg. The contract value would therefore be -
Lot size * Price
= 5,000 * 137.55
=Rs. 685,250
Below is the NRML margin.
The margin for overnight positions is Rs. 80,482/- and MIS (for intraday positions) is Rs. 40,241/-
It is approximately 11.7% for NRML, and 5.9% for MIS. This clearly demonstrates the high margin requirements of the commodities market.
Now for the Lead Mini contract.
Here's a snap quote from Lead Mini that expired in January 2017.
As per the table, the price is Rs.137.50/kg. Accordingly, the contract value would be -
Lot size * Price
= 1000 * 137.50
=Rs.137,500/
Below is the NRML margin.
The NRML margin is Rs. 16,442/- and MIS margin is at Rs. 8,221/-
It is approximately 11.7% for NRML, and 5.9% for MIS. The margin for Lead Mini (both NRML & MIS), is comparable to that charged for a Lead big contract. The financial outlay for margins is much lower because the lot size of Lead Mini is smaller.
MCX releases new contracts each month. Each contract expires at the end of the 5 th months. For example, MCX will announce the May 2017 contract in January 2017. The May 2017 contract will end on the last day of May 2017.
The January 2017 contract will expire on January 2017, the last day of work. The table below also shows that the January 2017 contract would expire on the last working day of January 2017.
This introduction pattern assures that at all points in the system, there will be a current month contract.
Take a look at this table -
The contract is commissioned five months before it expires, but it only gains liquidity in its final month. It is therefore a good idea to always trade the current month contract. Higher liquidity is associated with tighter bid-ask spreads. Tighter spreads mean lower impact costs, which in turn means less damage. This is especially true when placing market orders.
Nickel and its alloys are used extensively in our daily lives. Nickel is used in almost every aspect of our lives, including mobile phones, kitchenware, power generation, and transport. Most commonly, nickel is used in the production of stainless steel. Approximately 65% of all the nickel produced goes toward the production of stainless steel.
This is Nickel's 'demand-supply" situation.
As you can see Nickel production has outpaced demand. Nickel prices have fallen over the past year because of this.
My advice for trading Nickel is the same: trade the price, not the fundamentals.
There are two types of Nickel: Nickel (big contract) or Nickel Mini. Let me first list the contract specifications for the big Nickel and then let's look at Nickel Mini.
Below are the big nickel specs
Here's a snap quote on Nickel that expires January 2017.
As per the image, it is Rs. 685.50 per Kg. Accordingly, the contract value would be 685.50 per Kg.
Lot size * Price
= 250 * 6686.5
=Rs. Rs.
Below is the NRML margin.
The margin for overnight positions is Rs. 16,924/- and MIS (for intraday positions) margins are Rs. 8,462/-
This is about 10% for NRML, and about 5% to MIS.
Now for the Nickel Mini contract.
Here's the Snap Quote of Nickel Mini. It expires Jan 2017.
As per the image, it is Rs. 686/- per Kg. Accordingly, the contract value would be -
Lot size * Price
= 100 * 686
=Rs. Rs.
Below is the NRML margin.
The margin for overnight positions is Rs. 6,694/ and MIS (for intraday positions) is Rs. 3,347/
This is consistent with the large contract - it works out at 10% for NRML, and 5.0% for MIS.
Contracts are introduced each month in the same manner as Lead. For trading, I recommend that you use the current month contract as they have the most liquidity.