Trade with India’s Leading Commodity Broker
Bullion, Agro, Energy all at one-place
Fast & Secured Trading Platform
Dedicated Commodity Desk
Lower Margins, Higher Leverage
Did you know?
Brent Crude Oil is the most traded commodity globally, followed by coffee
You can trade in Crude Oil Options with just Rs. 500
India owns the largest Gold reserves in the world
MCX is the largest commodity derivatives exchange in India
Commodity trading in a nutshell
Commodity trading Involves buying and selling of commodities such as Gold, Silver Crude, Natural Gas, etc., by traders who are looking to profit from the price fluctuations caused by demand and supply factors along with geopolitical events! Common categories of commodities are - Bullion (includes metals like Gold, Silver, etc.), Energy (includes crude oil, natural gas, etc.) and Agro (includes agricultural products like wheat, cotton, etc.)
Why trade in commodity trading?
Invest, trade, hedge & speculate Trade across multiple commodities and protect your positions against adverse price movements
Lowest Margin requirements Get started with commodity options starting from as low as ₹500
Portfolio Diversification Trade in precious metals, agro products and other commodities alongside traditional equity-based investments
Profit from news-based price movements Capitalize on price movements resulting from international and domestic news
Why trade in commodity trading
with motilal oswal?
Live Expert Trading Sessions - Daily!
Ready-made Expert Option Strategies
Turbo-fast Trading Platforms
Intraday & positional advice for F&O
Making Commodity Trading Affordable
Futures
0.02%
Options
₹50/Lot
Delivery
0.20%
Highlights
Market Leaders For A Reason
35+ Years of Robust Research
2,500+ Branches
Trusted by 40L+ Customers
1,100+ Investment Advisors
Multiple Commodities to trade in
Bullion
Add shine to your portfolio with Gold and Silver
Base Metals
Strengthen your portfolio with Zinc, Copper, Aluminium, etc.
Energy
Power up your portfolio with Crude Oil, Natural Gas, etc.
Agro
Reap rewards of trading in Wheat, Cotton, Palm Oil, etc.
What is commodity trading?
Commodity trading Involves buying and selling of commodities such as Gold, Silver Crude, Natural Gas, etc., to profit from the price fluctuations. Commodity trading can be classified into 3 categories - Bullion (Gold, Silver, etc.), Energy (crude oil, natural gas, etc.) and Agro (wheat, cotton, etc.)
Commodity prices are continuously affected by real-world events with supply and demand dynamics playing a major role in deciding the commodity prices. Traders predict and monitor these events closely to try and make profit from price volatility . Geopolitical events like - war, elections, protests, etc. also have an important impact on commodity prices.
Trading in commodity markets can be highly liquid, with assets readily bought and sold, and they can also be quite volatile, with prices subject to rapid and significant fluctuations. This volatility can offer both opportunities and risks for traders in commodity trading. Commodity trading is done by various types of traders, including, individual retail traders, institutional investors, and commercial entities. Hedging through commodity markets forms the backbone of many industries, by helping businesses lock-in the supply of raw materials needed for production at specific rates.
Successful commodity trading, especially when trading commodities online, demands a deep understanding of the specific commodity being traded and market dynamics. Furthermore, it involves using smart ways to handle risks and take advantage of opportunities in this ever-changing commodity market.
In India, commodities are traded majorly on below exchanges
- MCX - Multi-commodity Exchange
- NCDEX - National Commodity and Derivatives Exchange
- ICEX - India Commodity Exchange
- NMCE - National Multi-commodity exchange
The commodity markets in India are open from 09:00 AM (Monday) to 11:30 PM (Friday) in two sessions
1) Morning sessions till 5 PM
2) Evening Session 5:00 PM to 11:30 PM.
How to trade in the commodity market?
To start trading in the commodities market, one needs to open a commodity trading account, with a broker who is a member of a commodity exchange. Once you open a commodity trading account online, you can trade in various commodities like - Gold, Silver, Crude, Natural Gas, Wheat, Aluminum etc.
Traders can trade commodities through futures contracts, options, commodity ETFs or directly buying and selling physical commodities.
To get started with commodity trading, follow these simple steps-
Open a Commodity Trading account
Choose an online broker and open a Commodity Trading account. Make sure you have a valid PAN Card, Aadhar Card and Bank Statements, which you are required to submit for KYC verification.
Fund your account
Commodity trading requires you to deposit an upfront margin amount into your trading account, which will be used to fund your trades. The margin amount you deposit should align with your risk tolerance and trading strategy.
Market research and analysis
Gain thorough knowledge of different commodity types and the factors affecting their prices, stay updated with recent happenings in the real world and get expert opinion to solidify your stance on commodity price movements before you finalize a trade.
Select a Trading strategy
Before getting started, you should choose a trading strategy that suits your goals as well as trading personality. Based on your risk appetite and trading personality, you can choose from multiple strategies such as trend following, mean reversion, scalping, etc.
Place your trades
You can place your trades online from your broker’s website or app during the commodity markets’ working hours which extend up to 9 PM. You can choose to place your order through any one of the below order types:
-
Market Order: Executes a trade at the current market price.
-
Limit Order: Specifies the price at which you want to buy or sell a commodity. It only executes if the market reaches that price.
Pro Tip: Remember to always use stop-loss orders to limit potential losses.
Keep an eye on the market
Closely monitor the market and commodities you have chosen. Keep an update on the news, events, and economic conditions that can have an impact on the commodities. Keep adjusting your trading strategy as and when needed based on market conditions.
What are the benefits & risks associated with commodity trading?
Commodity trading offers benefits like higher leverage, portfolio diversification, inflation hedge etc. with geopolitical events being a major risk. By offering higher leverage and extended trading hours, commodity markets appeal to a large population of traders.
While commodity trading offers a variety of benefits, there are certain risks that a trader needs to be aware of before venturing into commodity trading. Let’s understand the risks and rewards associated with commodity trading in detail
Benefits of Commodity Trading
Higher Leverage
Traditionally commodities futures and options contracts require lower margins as compared to other markets. As a result of this, traders with small capital can initiate larger positions with higher leverage, thereby magnifying their returns on capital. For example - A Crude Oil Option can be traded for as low as Rs 500 on the day of its expiry.
Diversification
Commodity trading enables you to diversify your portfolios by exploring various raw materials like metals, energy resources, and agricultural products. This diversification helps spread risk and reduce dependency on traditional assets, such as stocks and bonds.
Accessibility
Commodities can be traded online and settled in cash, allowing investors to trade commodities without the need to physically handle the goods. This accessibility makes it easier for individual investors to participate in commodity market trading.
Inflation Hedge
Commodities, such as gold and oil, tend to rise in value during inflationary periods. They can help protect the real value of your investments. Having these commodities in your portfolio, can potentially safeguard your investments against the eroding effects of inflation.
While trading in commodities might prove beneficial, there are certain risks that come along. Understanding the below risks can help you take appropriate steps to manage them while trading in commodities.
Price Volatility
Commodities are prone to significant price fluctuations due to factors like supply and demand imbalances, geopolitical events, and weather conditions. This price volatility can lead to both substantial gains and losses.
Lack of Income
Unlike dividend-paying stocks, many commodities do not generate income. Trading in commodities rely on capital appreciation for returns, making your capital more reliant on price movements.
Regulatory Risk
Regulatory risks in the commodities market are concerns about changes in government regulations and policies that can have a deep impact. Governments often introduce new laws or amend existing ones to address environmental, trade, taxation, or safety issues. To reduce risks like this, it is often suggested to adjust strategies when needed.
How do I get started in commodity trading in India?
To get started with commodity trading in India, it is important to first understand the commodities being traded, and their price dynamics. Before you trade in a particular commodity, it is important to understand which factors impact its prices and learn all about those factors.
Getting started in commodity trading in India can be exciting but it is equally risky. It is important to have enough knowledge before investing and keep learning every day to profit in the market.
To get
Educate yourself
Understand the various types of commodities you can invest in and what the difference between them are and what the factors that can affect their prices are. Solid understanding of the market is very important to success. This knowledge equips traders to make informed decisions.
Choose your commodity
Once you have a solid foundation of what the commodities market is and factors that can impact it, the next step is to select a specific commodity to focus on. Choosing the right commodity is very important as to align it with risk tolerance and objectives. Each commodity has a different level of risk and reward associated with it, and hence choosing the right commodity to trade becomes utmost important.
Manage risk
Managing risk is important to sustain yourself in the market for a longer period of time. To do this, you can set sound risk management strategies. Stop-loss orders, a commonly used technique that serves as a safety net against substantial losses. A stop-loss order defines the maximum loss you are willing to accept on a trade. Implementing effective risk management techniques at the right time is important in the commodity market.
Continuous learning and monitoring
With commodity markets continuously impacted by various geo-political events and happenings around the world, it is always advisable to stay updated with latest happenings to study the impact of it on the commodity price.
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Can I trade commodities on the Motilal Oswal platform?
Yes. Traders can trade in bullion, metals, agri and energy commodities with Motilal Oswal.
Which commodities can be traded with Motilal Oswal?
With Motilal Oswal, you can trade in the following given commodities contracts
- Metals: Contracts related to precious metals like gold, silver, and platinum, and those related to base metals like copper, aluminium, zinc, and nickel.
- Energy: Contracts related to energy commodities such as crude oil, natural gas, and other petroleum products.
- Agriculture: Contracts related to agricultural commodities like cereals (wheat, corn, and rice), pulses, oilseeds, spices, and soft commodities like cotton, sugar, and coffee.
What are the commodity brokerage charges on Motilal Oswal?
The commodity brokerage charges for Motilal Oswal are as follows:
- 0.02% for Futures.
- Rs. 50 per lot for Options.
How much time does it take to activate the commodity segment?
With Motilal Oswal, you can activate your commodity trading segment within 24hrs of request submission.
Can I use my MO demat account for commodity trading?
Yes, you can use your Motilal Oswal account for commodity trading. However, it is mandatory to activate the Commodity Trading segment without which you will not be allowed to trade in the commodity market. To activate the segment, all you have to do is log-in to your account > Go to profile > Settings > Activation > Select commodity. Post your request, you will be required to submit your proof of income which is last 6 months bank statement or your latest ITR. After successful submission of these documents, your commodity trading segment will be activated within 24 Hrs.
Are there any charges to activate the commodity segment?
No, there are no extra charges to activate your commodity trading segment.
What is the minimum margin amount required to trade in commodities?
The margin required to trade a particular commodity contract is dependent on various factors such as - type of commodity you are trading in, contract size, and market volatility. However, it is also true that you can start trading in commodities with a capital of as low as Rs 500 on the days of expiry of commodity contracts.
What are the "mini' contracts introduced on MCX?
Mini contracts on MCX refer to smaller-sized futures contracts introduced for various commodities. These contracts have reduced lot sizes compared to regular contracts, making them more accessible for retail traders with smaller capital. Mini contracts allow traders to participate in the commodity futures market with lower margin requirements and reduced exposure to price movements, making them a popular choice for traders looking to manage risk or trade in smaller quantities.
Which commodities have a mini contract available?
Mini contracts for Gold, Silver, Aluminium, Lead, Zinc, Crude Oil, Natural Gas etc. are available to trade on MCX.
Are there any educational resources available for beginners in commodity trading on the Motilal Oswal platform?
Yes. Motilal Oswal Financial Services offers several educational resources to assist beginners in getting started with commodities trading. One such resource is our expert research - which is published on regular intervals. To check out latest research on commodities, click here. Traders interested in commodity trading can also attend webinars and live commodity expiry sessions on StoCoMo, our in-app community.
Does Motilal Oswal provide live trading session on commodity?
Yes. You can join live trading sessions for commodity expiry on StoCoMo - Motilal Oswal's in-app community.
How is my income from commodity trading taxed?
Income tax on profits from commodity trading in India depends on the type of contract. If it's cash-settled without actual delivery, it's speculative income. If the commodity is delivered, it's non-speculative. Both are part of business income and taxed according to income tax slabs.