Ever since the dawn of civilization, human race has been engaged in trading of commodities and it is an integral part of our lives. Commodity trading refers to market activity that links the producers of the commodities effectively with their commercial consumers. Commodity trading mainly takes place in the commodity markets where raw or primary products are usually exchanged. The raw commodities here are traded on regulated commodities exchanges through standardized forms of contracts for buying/selling.
Commodity market is one of the few investment options where an individual with limited capital can make extraordinary profits in a relatively short period. For example, American Commodity trader Richard Dennis borrowed $1,600 and turned it into a $200 million fund in about 10 years. Nevertheless, because most people lose money, commodity trading has earned a bad reputation of being too risky for an average individual. Commodity trading is buying and selling of futures and the future options with various commodities as its underlying security. The truth is that commodity trading is only as risky as one wants to make it.
The commodity trading through the exchanges both in India and abroad has been experiencing tremendous progress which is evident from the fact that the trade in this segment is standing as the backbone of the global economy today. The promising nature of these markets has made them an attractive investment avenue for investors looking to generate high returns, hedge commodity price risks etc.
Indian markets have recently thrown open a new avenue for retail investors and traders to participate in commodity derivatives. Commodities offer immense potential to become a separate asset class for market-savvy investors, arbitrageurs, hedgers and speculators and are easy to understand as far as fundamentals of demand and supply are concerned. Thus, providing another good investment option in commodities to investors beyond equities, real estate and bonds.
Historically, pricing in commodities futures have been less volatile as compared to equity and bonds, thus providing an efficient portfolio diversification option. Like any other market, the one for commodity futures plays a valuable role in Price Discovery and Price Risk Management.
SKUNG is a trading cum clearing member of Multi Commodity Exchange of India (MCX) and National Commodity & Derivatives Exchange of India (NCDEX) and provides the customer with the perfect platform to trade in metals, precious metals, agro commodities etc. Its highly skilled, experienced and dedicated professionals offer to provide the customer with the best researched trading ideas, in depth market data and information, hedging and trading strategies to maximize returns from commodities as asset class.