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Indian markets have recently launched a new pathway i.e. commodity derivatives for retail investors and traders to take part. For people who wish to expand their portfolios beyond shares, bonds and real estate, commodities are the best alternatives. With the invention of three multi-commodity exchanges in the country, the retail investors can easily deal in commodity futures without possessing physical stocks. In fact, the commodities offer huge potential to develop into a separate asset class for market-savvy arbitrageurs, investors and speculators. Retail investors, who claim to be aware of the equity markets, may find commodities a bottomless market. However, where basics of demand and supply are concerned, commodities are very easy to understand. Retail investors must understand the risks and benefits of trading in commodities futures before trying their luck. Traditionally, pricing in commodities futures has been less unstable relative to equity and bonds, hence providing a competent portfolio diversification option. The four categories of trading commodities include: •Metals (gold, silver, platinum and copper) •Energy (crude oil, natural gas, heating oil and gasoline) •Livestock and Meat (pork bellies, lean hogs, feeder cattle and live cattle) •Agricultural (wheat, corn, soybeans, rice, coffee, cotton, cocoa and sugar) How Commodity Markets Work? •Commodity market is different from the Forex trading. Owing to the xDirect’s trading platforms, commodity market trading is now possible from any location. •First things first, every Commodity has its own unique characteristics like minimum transaction value, trading time (depending on the market where a Commodity was quoted), nominal transaction value, etc. •The trader can earn on a Commodity price growth as well as on price drop. In this manner, trader can sell a product at a higher price and subsequently buy the same product at a cheaper price, earning the difference. •Trading on a lesser margin is usually feasible, allowing the trader to acquire larger positions at much lesser capital •Online commodity trading is a good option to diversify one’s investment portfolio as commodity markets often progress in directions different from that of stock or currency markets. Benefits of Trading in Commodities through xDirect •Facilitates commodity trading across 6 sectors and over 20 products •Investors can branch out their overall portfolio risk because commodity trading provides an alternative investment •Prominent spreads and financing •Deep liquidity available •No requotes •Guaranteed stop loss, free of charge
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