Commodity trading in india

Whether it is equity or commodities, one has to trade carefully in futures. These future’s product can make or break yourinvestments. As of now we have only futures available in commodities with out any hedges.

I dont want to comment on number of commodities or liquidity etc as this is a growing market.
But I would suggest… one has adopt TRADE approach while investing in commodities. Trade approach means—- Before youinvest your margin (which is otherwise your capital) one has to be clear about the loss that he can bear. For example, If i am invetsing 1 lakh, i should be clear about my loss such as 50000 or 30000 etc. Then, devide your maximum loss with maximum loss that you want to afford per trade. Ex. I am ready to take a maximum loss of 3000 per trade. That means I should take 10 trades. Assuming all 10 trades hit stop loss then I will loose, Rs.30000/-. If 50% trades hits your target of Rs.4000 to 5000/- per trade, then you will be in profits.

Unfortunately, Most of the positional traders ( Those who take one trade and wait for the market to come in his favour) have suffered huge losses. (loosing entire capital and going to debits)
I can write it on paper that this trade call approach will yeild profits.
Do not over expose yourself. What should I call, if anyone is coming to Commodity Markets with a margin of 5000 to 10000 margins and expecting profits of 5000 to 10000/- … To my human sense it is called as betting or gambling….I dont call it as speculation as speculation is informed trading with sufficient investment margins. Unfortunately, small brokers are allowinginvestors (?) to over exposures. I see someone writing loosing of 20% in a single day. How can one loose 20% in a day when the average volatility is 2 to 3%. That means he must have taken 10 lots of Crude oil with a margin of 12000 to 15000…Crazy man…..Better these kind of people should buy lottery tickets rather than speculation.

My suggestions :

1. Minimum investable amount is Rs.50000/- ( for Agri Commodities), Rs.100000 ( for metals. – Gold 100g and Silver 5Kg, and Copper) and Rs.200000 (For 1 kg Gold and 30 kg Silver and Zinc)

Crude is basically driven by following factors.

1. Weekly US Inventory data ( Wednesday). Increase or decrease in inventories will drive higher or lower

2. Monthly Weather forecast of US.

3. OPEC decision of production Cut ( prices increase) or No production Cut ( price decrease)

4. Militatnt activities. On Friday night, some militants attcked on eof the oil refineries in Nigeria. result was an immediate upside of 1$.

Final suggestion: MARKETS ARE THERE FOR EVER….BUT YOUR MONEY (INVESTMENT) MIGHT NOT…. ALWAYS TRADE WITH STOP LOSSES

Happy Trading

Traders are now betting on who will announce the next big purchase. Will it be China looking to employ its $US2.3 trillion of reserves? What about Japan, which has the second-biggest pile of currency? Or Gulf states working to end dollar hegemony? And let’s not forget about Brazil and South Korea. Well done, India.

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  • November 2009
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The price of gold leapt to a record peak of $US1,093.10 an ounce in trading in London on Wednesday in the wake of the International Monetary Fund’s massive sale of the precious metal to India.

Gold had already reached a record high of $US1,087.80 on Tuesday as the IMF said it had sold 200 tonnes of gold to India’s central bank over a two-week period last month for $US6.7 billion ($A7.42 billion) to bolster its finances.

After spiking to a new high on Wednesday, gold pulled back slightly to stand at $US1,091 in London morning trade.

Gold and other commodity prices have surged in recent months amid a move away from the dollar, which has been slumping. The move accelerated last month on a report that Gulf states may stop using the greenback for oil trading.

India is the world’s biggest consumer of gold, importing between 700 and 800 tonnes of the metal every year or 20 per cent of global demand.

A senior IMF official said that the IMF was "lucky" in selling the 200 tonnes to India for roughly $US1,045 an ounce, compared with $US850 an ounce in April 2008.