Basics of Stock Market - Beginner

What is MCX trading?

While most people are familiar with equity trading, very few are knowledgeable about commodities trading. Let's take a look at the commodity markets in this article.

The majority of commodity trading is part of a diversification strategy. This type of investing in multiple assets can help to mitigate risk and reduce loss. Investors should diversify their portfolios to include bonds, stocks, commodities, currencies and other assets. To get higher returns.

The commodity market allows for trading of both hard and soft commodities. These commodities are easy to store and do not change due to weather conditions. Global economic factors, industrial production, etc. The prices of hard commodities are affected by these factors. Weather is a major factor in the price of agricultural commodities, also known as soft commodities. Soybean, guar and wheat are just a few examples. After doing thorough research, you can only start investing in commodity markets.

India's major commodity exchanges:

  • MCX (Multi Commodity Exchange).
  • NCDEX (National Commodity and Derivatives Exchange of India).
  • NMCE (National Multi Commodity Exchange).
  • ICE (Indian Commodity Exchange).

What is MCX?

It is essential to understand the full name of mcx: Multi Commodity Exchange. It's an online marketplace where commodities such as gold, silver and lead can be traded. They can be traded. MCX was established in Mumbai in 2003. It is India's largest commodity futures exchange. The regulator of MCX was FMC (Forward Markets Commission) from 2015 to 2015. FMC was merged into SEBI.

What is MCX trading?

Over MCX, commodities can be bought and sold. They can be physical settled or cash settled. The regulator for MCX, SEBI has recently made it mandatory to physically settle stock derivatives.

Margin in commodity trading

  1. 1. Initial Margin
  2. 2. M2M Margin
  3. 3. Special Margin
  • Initial Margin

    This is the minimum amount that you must pay in order to get into the futures contract.

  • M2M Margin

    Mark-to-market margin adjusts profit or loss on a daily basis. The clearinghouse transfers money to your account if you make profit within a given day. If you lose money, the broker transfers money to the clearinghouse.

  • Special Margin

    This information is used to limit speculation and volatility.

Let's see how commodity trading can benefit producers and importers.

Importers/exporters have the following benefits:

Hedging Because commodity prices fluctuate, it is important to use hedging strategies that minimize losses. You can hedge your exposure to the physical market by taking a different stand in commodity futures.

Producers get the following benefits:

Commodity trading is a way to discover prices. There are some factors that could cause the price to drop if you are a corn producer. You can fix the price at your corn by trading commodities.

Factors that impact the commodity market

  1. 1. Weather (floods and hurricanes, etc.
  2. 2.  Geopolitical tensions
  3. 3. Wars

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