Archive for January 16th, 2010

Know the Basics of Commodity Trading – Final Part

Hello Friends here we come up with an extension of our previous blog  “Why Commodities Trading? Know Now.. Part 1“.

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Know the Basics of Commodity Trading - Final Part

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Yesterday we read about the importance and need for Commodity Trading.

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In this blog we would read to understand that how can we do commodity trading, what is the process for that and how commodity trading works.

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Here we go with first question of the topic for the day..


How do you do commodity Trading?

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When you buy a Gold Futures contract, you undertake to do three things.

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1. Buy the amount of gold specified in the contract.

2. Buy it at the price specified in the contract.

3. Buy it on the expiry of the contract.

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This could be after one month, two months, three months and so on.


Of course, if you sell the Gold Futures contract before it expires, then you don’t have to worry about actually buying the gold.

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Let’s say you buy the Gold Future contract at say Rs 15000 per 10 gm.

Your hunch comes true and the gold prices rally to Rs 16000 per 10 gm.

You can sell the Gold Futures any time before expiry of the contract.


Gold and other commodity futures prices are quoted on the commodity exchanges in exactly the same way in which stock prices or stock futures prices are quoted on a daily basis in the stock markets.

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Now let us see How Commodity Trading works?

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They work just like stock futures 🙂

When you buy a Futures, you don’t have to pay the entire amount, just a fixed percentage of the cost.

This is known as the margin.


Let’s say you are buying a Gold Futures contract. The minimum contract size for a gold future is 100 gms.

100 gms of gold may be worth Rs 72,000. The margin for gold set by MCX is 3.5%.

So you only end up paying Rs 2,520.

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The low margin means that you can buy futures representing a large amount of gold by paying only a fraction of the price.

So you bought the Gold Futures contract when it was Rs 72,000 per 100 gms.


The next day, the price of gold rose to Rs 73,000 per 100 gms.  Rs 1,000 (Rs 73,000 – Rs 72,000) will be credited to your account.

The following day, the price dips to Rs 72,500. Rs 500 will get debited from your account (Rs 73,000 – Rs 72,500).

🙂

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Things You need to know about Commodities Trading 🙂

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Compared to stocks, trading in commodities is much cheaper, because margins are much lower than in stock futures.

Brokerage is low for commodity futures. It ranges from 0.05% to 0.12%.

Because of this, commodity futures are a speculator’s paradise.

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🙂

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If you are a hard-core trader who follows the technical charts and do not really care what you trade, and if you are nimble and savvy, then commodity futures could be another asset class that you would be interested in.

The advantages in this line is that there are no balance sheets, no complicated financial statements.

All you need to do is follow the supply and demand position of the commodities you trade in very closely.

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🙂

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Visit the commodities trading exchanges – NCDEX,NMCE and MCX – to find out which commodities are offered for trading, their contract size and other criteria.

You will have to get hold of a commodities broker but that should not be a problem.

There are lots of brokers that offer commodity trading these days.

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🙂

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But, it would be wise to avoid commodity trading if you are a rookie or beginner.

A much better move would be always to initially trade in stock futures before opting for commodity futures.

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🙂

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

Indians Equities Gained a Meagre 14 Points this Week

Indians Equities Gained a Meagre 14 Points this Week

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A benchmark index of Indian equities gained a meagre 14 points this week from its last weekly close even as broader indices managed to move up significantly and foreign investors bought into a wide range of scrips.

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Trading this week was range-bound on most days, and brushed aside improved industrial output numbers.

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The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) rose 14.1 points or 0.08 percent to end Friday at 17,584.87 points, from its previous weekly close at 17,540.29 points.

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The broader S&P CNX Nifty of the National Stock Exchange (NSE) moved up 0.14 percent or 7.45 points from its last weekly close to end at 5,252.2 points.

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Broader market indices, however, reflected the buying interest in mid-to-small sized scrips as the BSE midcap index ended 1.5 percent up and the BSE smallcap index rose 3.14 percent.

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Data with markets watchdog Securities and Exchange Board of India (SEBI) showed that foreign funds were net buyers during the week, having bought scrips worth $981.55 million.

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According to Jagannadham Thunuguntla, the equity head for brokerage firm SMC Capitals, the benchmark indices will continue to see a lot of sideways movement, having rallied over 90 percent in a year.

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‘Such sideways movement is expected, and will be the norm for some time to come.

Positive economic numbers and encouraging corporate results will not always translate into gains in the market,’ said Thunuguntla.

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The week started on a lackluster note Monday, with the Sensex ending 13 points lower at 17,526.71 points due to profit booking in front line stocks — Reliance Industries, ICICI Bank, and SBI.

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The Nifty, which followed a similar trajectory to the BSE benchmark, managed to gain marginally at 5,249.4 points, a rise of 0.09 percent.

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The top gainers in the Sensex were TCS (up 13.1 percent), Wipro (up 10.2 percent), Infosys (up 8.6 percent), ACC (up 7.5 percent) and Ambuja Cements (up 6.9 percent).

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Among top losers were SBI (down 6.2 percent), Hindalco (down 3.9 percent), ICICI Bank (down 3.6 percent), Hindustan Unilever (down 3.6 percent) and Reliance Infra (down 3.3 percent).

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🙂

Cashew Kernel Exports Decline to 1,07,496 Metric Tonnes

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Cashew Kernel Exports Decline to 1,07,496 Metric Tonnes

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Cashew kernel exports decline 4% in 2009

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India’s cashew kernel exports have showed an overall drop of a marginal 4 per cent to 1,07,496 metric tonnes during the calendar year 2009 compared to the previous year.

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During the period January to December 2009, the value of kernel exports was marginally lower by 2.2 per cent to Rs 2,869 crore as against the year ago period.

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The drop in exports was mainly attributed to a sharp rise in domestic consumption.

The exporters had to draw down to meet the domestic demand than export commitments.

The local consumption is pegged at around 1,30,000 tonnes for the year.

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According to Kochi based Cashew Export Promotion Council of India (CEPCI), the unit value realization was up by 2 per cent to Rs 266.87 per kg in the export market during 2009.

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🙂

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In Other major Commodities Updates we have news on the Govt Plans to buy 280 lakh tone of rice for central pool.

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Govt plans to buy 2.8 cr tonne of rice for central pool

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The government hopes to buy 280 lakh tonne of rice for the Central Pool during the ongoing 2009-10 marketing season, more than earlier target of 260 lakh tonne, even as the grain production this year is expected to be lower by 13 million tonne.

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According to the latest official data, total rice purchases by the Food Corporation of India (FCI) and state agencies stand at 178.30 lakh tonne as on Thursday, slightly below 182 lakh tonne procured in the same period of the 2008-09 season.

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The country’s rice production from the current Kharif season is estimated to be lower at 71.45 million tonne, compared with 84.58 million tonne in the last year season.

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🙂

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here