If you wish to make consistent profits from commodities trading, you will have to trade consistently. Never trade with the intention of making large sums of money right away. This is why usually 80% to 90% of the traders lose their money through trading commodities or forex or stocks market. When you are learning to trade commodities, a time will come when you achieve the breakeven point. This is the point where trading becomes profitable.
Commodity trading is held in commodity markets. It can be the derivatives market or even the spot market. In the derivatives market, commodities are traded via different financial instruments whereas in spot market, commodities are bought and sold hand to hand. Usually,Futures is a financial instrument that is used for trade exchanges in the commodity market.
Some regulated Futures Exchanges negotiate the future contract. It is a place where the buying and selling orders are brought to a single place on the exchange.
A trading floor or trading computer is required for carrying out transaction in the commodity future market. This exchange takes place among the brokers, who are the members of the exchange of a particular commodity, which is to be traded. Both buyers and sellers are going to have a broker. They will transmit the purchase and sale order.
While you are learning to trade commodities, you see that the buyers and sellers of commodity futures contracts have certain obligations. The buyer has to take delivery and pay for the cash commodity. The time frame for the commodity contract is set. The seller has to deliver the commodity for which he has paid the price that was set for the exchange. The price can change on the quality of the material supplied. The obligations of the buyers and sellers can be eliminated by offsetting the trade exchange before the due date of the contract. This is usually how spectators trade in the commodity markets.
Just like every other type of trading, for commodity trading, you have to open a trading account with the commodity broker. Just choose the broker carefully when you are planning to take recommendations from the trader. Make sure that the trader provides a good trading commission along. The broker is going to be responsible for connecting buyers and sellers. Through the trading accounts, the trader can continue on the exchange himself too by using the computer. This method of trading has become quite preferable among the traders, as it is convenient and quick. Just contact a licensed broker for trading.
Types of Mutual Funds and How to Invest in Them
Before investing, you need to know all about different types of funds which offer you the option of investing in a variety of financial instruments and get proportionate returns based on the size of your funds. These are explained below:
1. Equity Mutual Funds:
If you wish to invest solely in company shares, equity-based fund is the perfect choice for you. It offers the option to invest in a selection of stocks to create a balanced portfolio with lesser risk as compared to directly investing in equities because this fund would be managed by professionals. However, since equity-based funds have a higher risk-reward potential, you should think carefully before opting for it.
2. Debt Mutual Funds:
In this option, funds are allocated solely in debt instruments including bonds and commercial paper among other things. It has a low-risk profile and offer regular returns. This is the right choice for investors whose first priority is to protect their investments. However, the returns are not as attractive as in equity-based funds.
3. Money Market Mutual Funds:
These are also known as liquid funds which seek to invest in short-term debt instruments like certificates of deposit, fixed deposits and treasury bills. This option is best for those who prefer higher liquidity and protection of capital over higher returns involving a higher level of risk.
4. Gold Funds:
Gold has been an investment option for millennia and its value has only grown in modern times because of its viability as an investment during periods of financial inflation or when markets are not performing well in general. Traditionally, people have directly invested in gold for all its advantages but with gold funds you can choose to invest in gold through Gold ETF (Exchange-Traded Funds). This lets you avoid the risk of theft or damage associated with investing in physical gold. Gold funds might also invest in shares of companies involved in gold mining.
You can choose the type of fund which suits your requirements or opt for a balanced fund instead in which funds are allocated in both equity and debt instruments to reduce the risk level to an extent and still gain from high-performance equities. It is important to read the offer document carefully before investing in mutual funds and choose your Asset Management Company (AMC) with discretion to avoid any issues later.
Ashlar Online offers a wide selection of financial advisory services for retail and institutional investors. Whether you are trading in equities, commodities, currency or F&O, we are here to assist you with your investments and offer expert advice on how to invest for growth and realize your wealth generation goals. We offer free demat account, free trading account and free e-insurance account opening and provide free trading platform which performs efficiently across several platforms including desktop, laptop, mobile phone and tablets. Our motto is to motivate, educate, support and promote investors to achieve their financial goals in an effective manner.
<!–google_ad_section_end–>