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Understanding concept of commodity trading in India

 The Indian financial markets have evolved significantly over the past few decades. Today, there are several market segments for interested investors and traders. Among these options is the commodity market. If you want to get started with commodity trading in India, a good place to begin is to understand what this concept is all about. Once you get the fundamentals right, you’ll find that commodity online trading is easy enough, even for a beginner. 

What is commodity trading?

Commodities are essentially physical substances like gold, silver, crops, oil and other products. These commodities are traded in everyday life, often in bulk. As a result of the constant impact of demand and supply on the prices of these goods, their prices are subject to changes. Commodity trading aims to leverage these price changes, so traders can use them to their advantage and gain from these price movements. 

In India, you can either trade in commodities directly, or through commodity options trading and commodity futures trading. You also need a commodity trading account to get started. Trading in commodities is possible via the commodity exchanges established in the country. 

Commodity exchanges in India

A commodity exchange, like a stock exchange, is a place where commodities and commodity derivatives can be bought and sold. The top commodity exchanges in India include: 

  • Multi Commodity Exchange of India Ltd
  • National Commodity and Derivative Exchange
  • National Multi Commodity Exchange of India 

Investors and traders are free to buy and sell commodities and commodity derivatives on any of these exchanges. If you’re contemplating trading in commodities, check out how you can benefit from this.

Advantages of commodity trading

Commodity online trading gives traders many benefits. Here are some of them. 

  • Trading online is convenient and easy, and you can do this from any internet-compatible device like your smartphone or your laptop.
  • The commodity market is very liquid, making it easier to buy and sell assets as needed. Some commodities are more liquid than others, so make sure you perform adequate research beforehand. 
  • Commodity trading helps you diversify your portfolio.
  • You also get to use the benefits of leverage - aka borrowed capital - so you can get the full benefits of trading without shelling out a huge sum of money.


This should give you a better idea of the concept of commodity trading in India. You can get started with online commodity trading by opening a demat and trading account. And as with all investments, it is important to constantly keep an eye on market developments, so you can use the price movements of commodities to your advantage. 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | How to do a proper research and trade in commodities in India |  MCX Meaning - Learn What is MCX, Its Advantages, and More

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