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Commodity trading account
To trade in commodities, you need to open a commodity trading account with a broker. This type of trading is essentially in futures and options of products like agriculture (wheat, cotton, etc.), minerals (petroleum), and precious metals (gold, silver, etc.).
Commodity futures and options
Before you open a commodity account, you need to know a little bit about derivatives. There are two main types of products – futures and options. Futures contracts give you the right to purchase or sell a certain amount of a particular commodity at a predetermined date in the future. Options give you the right, but not the obligation, to buy or sell a specific commodity at a predetermined price in the future.
Futures and options are traded on commodity exchanges like Multi-Commodity Exchange (MCX) and National Commodity and Derivatives Exchange (NCDEX). Only members (brokers) are allowed to trade on these exchange, so you need to open commodity trading account with a broker like AngelBroking.
How to open commodity trading account
To open a commodity trading account, you have to do the following:
- Fill a form giving all your details.
- Submit proof of identity and address like PAN card, Aadhaar card, passport or voter card. You can do commodity trading account opening online by filling in all details online and submitting the documents at our nearest AngelBroking office.
- Submit a member-client agreement on non-judicial stamp paper.
- Income proof like Form 16 or income tax returns.
You will also need to deposit margin money before you start trading in commodity futures and options. The initial margin is a percentage of the transactions you carry out and could vary from 5-10 percent. Lower the margin, the higher the leverage. If you trade in Rs 10 lakh worth of futures, you will have to pay Rs 50,000 as initial margin if it is 5 percent. This percentage is fixed, and if price movements are adverse, you might have to pay additional mark-to-market (MTM) margin on your transactions.
Here’s why you might want to open commodity trading account with AngelBroking.
- AngelBroking’s products and services have bagged multiple awards and are internationally recognised.
- We offer up to 40 times leverage – the industry’s highest.
- We boast of over a million satisfied clients.
- We have a robust support system, with our dedicated relationship managers and dealers providing services through 12,000 trading terminals.
- AngelBroking has an extensive network of 11,000 sub-brokers across the country, so wherever you are, there’s one within easy reach.
- We have a considerable presence in over 900 cities.