The market has a wide range of assets where investors like to fit in their capital with an expectation to earn profit. One such market is the commodity market which is divided into hard and soft commodities. Just as a Demat account is required to deal in equity shares, a Demat account is required to trade in commodities.
The best stock broker in Jaipur with real-time quotes and data is required to trade in commodities who is well versed with the trading platform and are abundant in screening and charting tools. Hence, opening a Demat account with the best stock brokers in Jaipur for commodities like Laxminarayan Finvest would be a good option for those who require brokers with a wealth of research and technical indicators along with high-quality customer services, all at low-cost.
HOW TO START TRADING COMMODITIES?
Commodity trading is becoming very popular, although not as popular as equity trading. In some way, the tax on commodity transactions or CTT has retained the volumes. But recently, the traders are getting a sight of all the benefits of commodity trading and are therefore willing to try their hands on the new products plus for hedging.
The primary step to start with commodity trading is to complete the KYC and open a commodity trading account. For now, the commodity trading account is yet to get its distinct account from the equity trading account. Just like a Demat account is required for equity trading, to trade in commodities, a Demat account is required. The functioning of a Demat account is just like a bank account whereas the only difference is that it holds the commodity options and futures position in the market. All the information related to an individual’s trades and their actual holdings of all the instruments that they have invested in are stored in a Demat account.
TYPES OF COMMODITY CONTRACT COMMODITIES
At present, the traders who desire to invest in commodities are permitted to open a Demat account only with NDSL.
Briefly, there are four types of commodity contract commodities that could be traded on 2 major exchanges which are NCDEX and MCX:
- Precious Metals
- Base or Industrial Metals
- Hydrocarbon Metals
- Agricultural Metals
ADVANTAGES OF COMMODITY TRADING
There are various advantages of investing in commodity markets. These are listed below:
- In today’s time, all the commodities from zinc to steel are facing a sharp sweep in prices. It would be profitable for any individual to buy futures in such commodities by paying a margin or by purchasing call options. This way, any increase in inflation will be offset by the gains from one’s long commodity position.
- The real advantage of trading commodities is that it offers protection to those who are at risk. For example, a manufacturer of electric cars needs large amounts of copper and therefore needs reassurance that copper prices are not going to get out of hand. Buy copper futures for delivery in advance, such EV manufacturers can lock in the price of copper. This gives you more security in terms of production costs and planning.
- Commodity trading is not only practiced by hedgers but also by speculators. One reason speculators love commodity futures is the tremendous leverage they offer. Typically, raw material margins are 5-7% of the price. This means that your leverage is 14 to 20 times the margin you are using. This is music to the ears of traders and speculators. A word of caution, however, is that it comes with a number of risks.
- Commodities like gold, usually have a low correlation with stocks. So, if you want to diversify your concentration imbalances and not invest to buy gold, you can replicate trading by buying gold futures. This gives you the same payouts as holding gold and yo u can even go for Crypto Online Exchange.
Laxminarayan Finvest- The Best Stock Broker in Jaipur for Commodity Trading
A reliable stock broker is what Laxmi Narayan Finvest is reviewed to be by their investors. They are aware of all the gains and risks involved in trading and advise their clients accordingly. They are not just the advisors but become a very important part of their investor’s financial journey making everything simpler and profitable.
LINF in Jaipur has a team of business consultants, advisors, accountants, and customer support to take the best care of their clients in time. As compared to their competitors, they stand out because of their Unique Selling Price in the market and thus attract investors.
The good reviews from their Jaipur clients and across, make them all the more reliable, mentioning that they are quite promising and render profitable deals for them with utmost return on investment.
Therefore, to open an account for commodity trading, one must approach LINF who are considered the best stock brokers in Jaipur.