What Is Commodity Trading in the Indian Market?
What Is Commodity Trading in the Indian Market?
By Direct Margin Academy
Introduction
Commodity trading is one of the oldest forms of trading in the world and plays a vital role in the Indian financial markets. While most traders focus only on stocks and indices, commodities offer diversification, inflation protection, and unique trading opportunities.
At Direct Margin Academy, we train traders to understand commodity markets practically, with proper risk management and discipline.
What Is Commodity Trading? (Definition)
Commodity trading involves buying and selling raw materials or primary goods such as gold, silver, crude oil, natural gas, and agricultural products through exchanges.
In India, commodity trading is done mainly through:
- MCX (Multi Commodity Exchange)
- NCDEX (National Commodity & Derivatives Exchange)
Traders participate in commodity markets using futures and options contracts.
Types of Commodities Traded in India
Bullion Commodities
- Gold
- Silver
Energy Commodities
- Crude Oil
- Natural Gas
Agricultural Commodities
- Cotton
- Chana
- Soybean
Example: Gold Commodity Trading (Indian Market)
- Current Gold price (MCX): ₹60,000 per 10 grams
- You expect gold prices to rise
- You buy Gold Futures at ₹60,100
If gold moves to ₹60,500:
- Profit = ₹400 per 10 grams
If gold falls to ₹59,700:
- Loss = ₹400 per 10 grams
📌 Commodity futures move point-to-point, similar to index futures.
Example: Crude Oil Intraday Trading
- MCX Crude Oil price: ₹6,500
- You buy Crude Oil futures
- Target: ₹6,550
- Stop Loss: ₹6,470
Crude oil is highly volatile and best suited for disciplined intraday traders.
Why Traders Choose Commodity Trading
- Less correlation with stock market
- Global demand and supply influence
- Hedge against inflation
- Good intraday volatility
Commodity trading provides opportunities even when equity markets are sideways.
Commodity Trading vs Share Market Trading
| Feature | Commodity Trading | Share Market Trading |
| Influenced By | Global factors | Company fundamentals |
| Volatility | High | Medium |
| Trading Hours | Extended | Limited |
| Hedging | Strong | Limited |
Case Study 1: Gold Swing Trader (MCX)
Profile:
- Name: Suresh
- Location: Coimbatore
- Strategy: Trend-following in Gold futures
Before Proper Training
- Over-leveraged trades
- No stop loss
- Inconsistent results
After Training at Direct Margin Academy
- Fixed lot size
- Risk-based entries
- Consistent monthly returns of 4–6%
Learning: Commodity trading rewards patience and discipline.
Case Study 2: Crude Oil Intraday Trader
Profile:
- Name: Anjali
- Location: Mumbai
- Market: MCX Crude Oil
Trading Rules:
- Trades only during global overlap hours
- Fixed stop loss
- Maximum 2 trades per day
Outcome:
- Reduced drawdowns
- Improved accuracy
- Better emotional control
Common Mistakes in Commodity Trading
- Ignoring global news impact
- Overtrading crude oil
- Using high leverage
- Trading without understanding contract size
Avoiding these mistakes is critical for long-term success.
Who Should Trade Commodities?
✔ Traders looking for diversification
✔ Traders with disciplined risk management
✔ Traders trained in futures and options
❌ Not suitable for gamblers or beginners without guidance
Final Thoughts from Direct Margin Academy
Commodity trading offers excellent opportunities when approached with knowledge, discipline, and proper training. Whether it is gold, crude oil, or agricultural commodities, success depends on risk control and consistency.
At Direct Margin Academy, we provide live market training and practical exposure to commodity trading.
“Trade commodities with respect for risk, and the market will reward patience.”
Want to Learn Commodity Trading Practically?
Join Direct Margin Academy’s Commodity Trading Program
Learn smart. Trade disciplined. Grow consistently.
