How to choose commodities for intraday trading

The commodity market is a finely broadened market and institutions, individuals as well as corporate invest here. Two most important exchanges are MCX and NCDEX. Most aggressively dealt commodities on MCX are gold, silver plus crude oil and on NCDEX is mentha oil, crude palm oil in addition to cotton etc.

Traders ought to always begin with the commodities where they have some kind of industry knowledge. Then, they can pick commodities that fall within their risk constraints.

Your commodity industry knowledge

In case you are experienced with commodities via the work you do, then focus on those commodities where you already have some kind of fundamental understanding. It is significant to understand that not all commodities have the same risk. The margin on futures contract essentially influences the measure of risk with each commodity, so be certain that the amount of risk is apt for you when you choose a commodity to trade.

Unpredictability of commodities

Next, be sure to see that any commodities you pick to trade fall into your risk constraints. Some commodities make minute average moves every day while others make broad swings every day. To catch the unpredictability of every commodity, you should verify the futures margin of the commodity. The margin is influenced by an assortment of factors, but it generally has to do with the everyday price changes of futures contracts. The exchanges also alter these values when market situations vary.

How to pick commodities for intraday trading?

Some pro traders like to focus on one or maybe a few commodities to trade. The best logic behind this approach is that you can closely comprehend all the little oddities of a commodity that a lot of traders fail to spot. Try to trade on a multiplicity of commodities and futures, even though you may have a couple of preferred markets.

Overall, trade in liquid commodities by looking for certain trade arranges. Markets, as well as the conditions of trade, continuously change, so some commodities may extend good trading chances one year but not the next and so on.

Monitor and trade on all the on the go commodities as that affords you enhanced overall trading chances. With picked commodities, you merely have to research or even scan charts on almost 30 markets. That is much safer than researching for all the commodities.

Also, base your decisions of choosing commodities to trade on the four significant factors as mentioned below:

1) Technical and basic aspects

To choose the most excellent commodity from trading viewpoint research correctly the technical as well as basic factors. This will assist in interpreting whether to trade in it or not.

2) Comfort degree

Never pick a commodity in which you are not at ease while trading. Also if you have not heard or do not have adequate knowledge then shun trading on such commodity. Always pick those commodities with which you are familiar.

3) Recognize the right type

The commodity market is mostly divided into bullion, energy, base metals and agricultural commodities. First, choose the class which best conforms to your requisites. After choosing a wider head you should yet again split up the products in that class and conduct further research on it. Be very cautious while making the ultimate option as the wrong alternative may lead to monetary losses.

4) Risk plus volatility

While selecting a category to be vigilant as some categories have high unpredictability. Conversely, some commodities are predictable. Calculate your risk-bearing capacity and then choose the commodity you want to trade.

Final words

Together with the above-mentioned factors, traders must as well comprehend kind of trader they are. A few people can deal the force of selling and day trading, whereas others do not have adequate time to dedicate to the market. Comprehend the kind of trader you are to trade in a more effective mode. Even though there are a few general attributes which every kind of trader shares like capital disclosure and risk managing. Market expert advice on intraday trading tips, most excellent MCX tips and more are as well supportive in better managing risk and returns. To become a triumphant commodity trader always be thoughtful, plan a trading strategy, understand the strategy and use it in conformity with the market requirements.

Read Also – How To Do Intraday Trading- How To Make The Profit in Intraday Trading

Start Trading Now

Share this Post

Get The Latest Updates

Related Posts

The Share Market A Guide to Trading (2)

The Share Market: A Guide to Trading – Gill Broking

It is, therefore, important to learn both the pros and cons of intraday trading to get a better idea of how this market works and how exactly you can grow your money. In this post, we will walk you through a few advantages and disadvantages of intraday trading. So, keep reading to learn more.

• Beware of fixed/guaranteed/regular returns/ capital protection schemes. Brokers or their authorized persons or any of their associates are not authorized to offer fixed/guaranteed/regular returns/ capital protection on your investment or authorized to enter into any loan agreement with you to pay interest on the funds offered by you. Please note that in case of default of a member claim for funds or securities given to the broker under any arrangement/ agreement of indicative return will not be accepted by the relevant Committee of the Exchange as per the approved norms.
• Ensure that pay-out of funds/securities is received in your account within 1 working day from the date of pay-out.
• Be careful while executing the PoA (Power of Attorney) – specify all the rights that the stock broker can exercise and timeframe for which PoA is valid. It may be noted that PoA is not a mandatory requirement as per SEBI / Exchanges.
• Register for online applications viz Speed-e and Easiest provided by Depositories for online delivery of securities as an alternative to PoA.

• Do not keep funds idle with the Stock Broker. Please note that your stock broker has to return the credit balance lying with them, within three working days in case you have not done any transaction within last 30 calendar days. Please note that in case of default of a Member, claim for funds and securities, without any transaction on the exchange will not be accepted by the relevant Committee of the Exchange as per the approved norms.

• Check the frequency of accounts settlement opted for. If you have opted for running account, please ensure that your broker settles your account and, in any case, not later than once in 90 days (or 30 days if you have opted for 30 days settlement). In case of declaration of trading member as defaulter, the claims of clients against such defaulter member would be subject to norms for eligibility of claims for compensation from IPF to the clients of the defaulter member. These norms are available on Exchange website at following link: NSE, MCX

• Brokers are not permitted to accept transfer of securities as margin. Securities offered as margin/ collateral MUST remain in the account of the client and can be pledged to the broker only by way of ‘margin pledge’, created in the Depository system. Clients are not permitted to place any securities with the broker or associate of the broker or authorized person of the broker for any reason. Broker can take securities belonging to clients only for settlement of securities sold by the client.

• Always keep your contact details viz. Mobile number/Email ID updated with the stock broker. Email and mobile number is mandatory and you must provide the same to your broker for updation in Exchange records. You must immediately take up the matter with Stock Broker/Exchange if you are not receiving the messages from Exchange/Depositories regularly.

• Don’t ignore any emails/SMSs received from the Exchange for trades done by you. Verify the same with the Contract notes/Statement of accounts received from your broker and report discrepancy, if any, to your broker in writing immediately and if the Stock Broker does not respond, please take this up with the Exchange/Depositories forthwith.

• Check messages sent by Exchanges on a weekly basis regarding funds and securities balances reported by the trading member, compare it with the weekly statement of account sent by broker and immediately raise a concern to the exchange if you notice a discrepancy.

• Please do not transfer funds, for the purposes of trading to anyone, including an authorized person or an associate of the broker, other than a SEBI registered Stock broker.

• Do not deal with unregistered intermediaries (who are not registered with SEBI/Exchanges).

We are here to assist you !
Fill out the form and Start Trading...