Are you curious about the top commodities traded in India? Commodity trading is one of the most popular way among traders to diversifies the portfolio.
Commodity trading is a lucrative way to earn high returns for a long period of time.
In this article –
- What exactly are Commodities?
- Why should you to Trade Commodities?
- Considerations When Choosing a Commodity to Trade
- Top Commodities to Trade in India
- Where Can You Trade Commodities?
- Final Thoughts :
What exactly are Commodities?
Commodities are things or products that we use in our daily lives, such as metals, food, and energy.
Commodities are tradable in nature, which means that they are any kind of natural resource that is used by businesses and individuals.
Commodities are divided into 3 categories in the sense of trading:
- Metals is the first type. Gold, silver and aluminum fall under this category.
- Agricultural products, such as Pulses, spices, grain, oil and oilseeds., fall under the second category.
- Energy: Natural gas, Brent crude, crude oil, thermal coal etc fall under the third category.
Why should you to Trade Commodities?
There are a variety of reasons why you’d want to trade commodities.
- Commodity prices are mostly determined by supply and demand, a consideration that you can monitor to forecast whether a commodity’s value will increase or decrease, and therefore whether you can long or short it.
- Commodities can be purchased and sold in a variety of formats, with the most common being regular buying and selling, futures contracts etc.
- Certain goods are more likely to maintain their value in unpredictable and volatile times, regardless of external conditions. Gold 🙂
This makes them a more secure investment.
Considerations When Choosing a Commodity to Trade
Commodities may be an outstanding addition to your trading portfolio, so how do you know the ones to trade?
- Check liquidity of the commodities before starting to trade.
- Check if it simple to purchase and sell…
- Check the supply and demand for that commodity.
- Check if there are enough traders willing to purchase from you at the price you want to sell at if you buy that commodity.
What is the future of commodity?
For example, in the case of fossil fuels, this will become scarce in the future, diminishing availability and potentially increasing demand.
However, it may become less common as customers adopt renewable energy sources (such as solar power) and production practices shift away from the use of fossil fuels, reducing demand.
Which trading form do you prefer?
Are you interested in futures contracts, or traditional trading, in which you buy a commodity now and sell it when the prices goes up.
Top Commodities to Trade in India
1. Crude Oil
Crude oil is one of the top traded commodities in India. It is produced naturally and is a fossil fuel that consists of organic materials and hydrocarbon deposits.
There demand of crude oil is always increasing in India.
Since the Middle East is one of the largest producers of crude oil, political events in the region have an effect on crude oil.
Since gold is one of the world’s oldest and most precious commodities, it has become an integral part of the Indian household.
Gold is used in jewelry, the medical industry and other industries as well.
China, Australia, and Canada are the top gold producing nations, with India being the top gold buyer.
For thousands of years, silver has been used as a source of currency and as a valuable commodity.
It’s cheaper than the Gold. It also provides a fair return to its buyer.
If the price of other precious metals, such as gold, makes it impossible to invest in them, silver is an option.
India is one of the top 20 silver producing countries in the world, indicating the importance of silver as an investment opportunity.
4. Natural Gas
Natural gas is environmentally sustainable, and many companies have begun to use compressed natural gas (CNG) for a variety of uses in recent years.
The Indian government recommends that CNG be used in the electricity sector.
Natural gas consumption is expected to increase in the future because it is less expensive than oil.
Copper is the third most used metal in the world, after steel and aluminium.
Today, copper is manufactured in over 25 countries.
It is a commodity whose fortunes are closely related to the state of the global economy.
Copper is a commonly used metal in industries for electrical wiring, utensils, equipments, and so on.
It is a soft metal that conducts heat and electricity very well.
Aluminium is another excellent commodity for trading because it is a lightweight metal that is used in a variety of industries.
Aluminium is widely used in industrial industries such as automotive, architecture, and electronics, among others, and is in high demand.
The metal is flexible and widely used in a variety of industries.
Where Can You Trade Commodities?
Commodities are traded through a broker.
However, selecting the best broker would be determined by the trading strategy you choose to use, broker’s experience in commodity trading etc.
We recommend trading commodities with following brokers.
Best Brokers For Commodity Trading
Zerodha is a Bangalore-based company that is doing very well in the stock market.
Its architecture and design are straightforward and easy to use.
With features such as a wishlist, order tab, single click square off, holdings tab, and many more, the platform is suitable for everyone.
When you hit ‘Add Funds,’ the money will be added to your trading account as soon as your bank confirms it.
You get instant alert after placing a order.
Open your account online with Zerodha to buy commodities such as gold and silver.
The industry’s second-best king, with a variety of top-tier features.
You can easily navigate the site and place a trade.
The availability of advanced charts with a range of time frames, indicators and drawing tools is a major advantage.
A consumer can trade directly from charts by using the Trade from Chart (TFC) function.
It’s very easy to buy and sell Gold, silver, crude oil etc.
Open your commodity account with Upstox and start trading and making money online.
Final Thoughts :
Commodities have become an appealing investment choice for investors.
It aid in the creation of a well-balanced investment portfolio.
Furthermore, depending on the broker, there are various methods for investing in commodities, with commodity futures contracts being the most common.