Day Trading in MCX Commodities, Which commodities and session are suitable for beginners?

May 13th, 2019 → 3:54 pm @

Day Trading in MCX Commodities

As with any new venture, you should learn all its basics and all its ins and outs. Do your homework and approach this volatile market with intense care and concern. Speed and efficiency of execution are needed in online trading. Don’t forget to approach this with discipline and precision. So that online commodity trading can bring lots and lots of fortunes for you. Mistakes can be very expensive in commodity trading so it is better to keep it minimum. The only way to minimize mistake is to study the underlying supply and demand fundamentals for that asset. A vast variety of information is available for free from the commodity exchanges and trade organization as well. So how much you can learn about the fundamentals learn that much. Commodity trading has the ability to give you huge gains. Newton’s law is for every action, there is an equal and opposite reaction. Likewise, how much reward is there in online commodity trading that much of risk is also there. 

Future contract, a commodity trader should come to know about it because the better way of commodity investment is through future contract. Now let’s listen to the advantages of the future contract. 

  • If you trade carefully, then you can earn a lot from future trading
  • This is a very liquid market
  • These are highly leveraged investments 
  • For controlling a full-size contract only minimum deposit accounts require 

 

Profitable commodity segments for beginners 

 

There exist different commodity exchanges. Out of these MCX is the best exchange to trade with. A novice trader can start trading with Crude oil, Natural gas (Energy). Copper, Aluminium, Zinc (Base Metals). Gold, Silver (Precious Metals). 

 

Advantages of oil trading

 

The four reasons for oil trading are Diversification, Safe Haven, Inflation hedging, and Speculation let’s see in detail

Very much profitable

 

Crude oil market normally has substantial profit making capacity. Very lucrative investment is this. Some traders have the ability to make ten to thousands of dollars in a single trade. The importance of this market is it requires only less investment as compared to the stock market. Oil shows a substantial price change in a very small time span. This is the benefit of future investors. Everyone wants to purchase it at a lower price and the sudden price hike gifts huge profit. This is meant by the ability of crude to make a substantial profit. 

Liquidity

 

Crude is a very actively traded commodity in MCX. It is the most liquid commodity because of the high volume that is traded every day.  

Leverage

 

A trader can purchase oil on margin. The margin usually set by the exchanges and it is often as low as 5% of the value of the investment. This means with $5000 you can buy $100,000 worth oil futures. Consider this as an option only because margin trading has its own risk. 

Easy crude

 

Crude oil is a relatively easy future to get started. Anyone who finds a little time for research the process can figure it out easily who can make consistent profit from this area. 

 

Advantages of Precious Metal Trading

 

Many traders are participating in precious metals trading like Gold, Silver, and Platinum trading because of their hypothetical price rotation characteristic. Let’s see the merits of precious metal trading. 

1. They are safe

Most of the traders prefer Gold and Silver trading because they are safe during an economic depression. Especially Gold acts as a strong store of purchasing power. These two are a highly liquid commodity and it is accepted all over the world. Earlier there was a direct link between the gold and major world currency. But now there was nothing.  

2. Free from liability

Gold and Silver these two precious metals are free from liability. They do not form a liability to bank, government or not an individual business entity. 

3. Huge Liquidity

These metals offer the best and high liquid value internationally. This high liquidity value is useful for selling this product in any part of the world. The reason behind this is theses metals never depreciate its value. 

 

Best time for Commodity Trading

 

There is not a fixed time zone for buying commodities. But commodity market shows some movements at certain times. One is after 12.00 PM or we can say in between 12.00 PM to 2.00 PM the second one is after 6.00 PM. Or in between 6.00 PM to 8.30 PM. From these two time zones, a trader can book profit.  

 

Conclusion

 

A trader can take bigger positions in commodities than in stocks the reason behind this is the requirement of less capital. Even though it has increased return on less capital it comes with increased risk. One who wants to start day trading in MCX first start trading with Crude oil, Nickel, and Natural gas. These are the high volatile commodities. Take 50k capital. Split up 50k into two parts. 25k for trading and another 25k for protecting the first 25k. With the 25k investment, you can buy 5 lots of Crude oil or 7 lots Natural Gas, or 9 lots Nickel. You should aware of the underlying asset otherwise it would be hard to speculate on the same. When you select crude you have to understand

 

Oil Companies’ Refinery utilization rates

US Inventory Reports

Geo politics 

Weather conditions

Natural Gas

 

US Inventory Reports

Weather conditions in the US

Crude price

US Home demands

Nickel

 

Developments in the Chinese manufacturing sector

Trade policies

Trading levels will not work with our expectation market can go against our expectation at any time. So don’t do gambling in trading. Find out some time to study the underlying asset to go in trading. There is a lot of software available in the market. But only less number we can rely on. All the available software’s are not accurate ones. If one can provide you 85 to 90% accuracy you can rely on it. Win Trader is one. 

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