Understanding Commodity Trading What is Commodity trading? In simplest words buying and selling of a commodity for a price is called commodity trading. However, due to improvement in technology this can be done sitting at your home on your computer terminal vie various nationwide commodity exchanges. This is done in a form of future contracts. Which is also called Commodity Future. The settlement can be done in cash or delivery till last date of expiry of the future contract Namely there are two major national commodity exchange: Commodity exchanges in NEPAL 1. Mercantile Exchanged Nepal Limited (MEX) 2. Nepal Spot Exchange 3. NDEX What all are traded on Commodity Exchanges? Almost every commodity is being traded in commodity exchanges. For easy to understand Commodities are basically divided in four broad categories.
Why to invest in Commodity Trading ? Commodity trading is now convenient after introduction of Electronic trading and settlement system. It can be understood and followed very easily. Anyone doesn’t have to be expert in Finances and understanding different sectors and business. It can be started just with a Capital of Rs. 70000 only. It is mainly driven by fundamentals of Demand and Supply. However, there are other factors too therefore an individual investor should consider market and systemic risk associated in any trading.Comparing to equity market commodity future is less volatile and more predictable. So it is an efficient portfolio diversification option.
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