Hi friends, and welcome to this podcast by Angel One.
Doston, new year is around the corner. And a new year is a good excuse to begin doing new things, You might have had enough experience with the stock markets, or maybe you are simply looking to wet your feet in other types of markets. No matter what the reason, commodities markets are one of the oldest and heavily traded markets in the world. Doston agar aap commodity trading explore karna chahte ho, toh your are very much in luck today - kyunki aaj ke podcasts mein hum commodity markets mein ek fresh start kaise ki jaye, ye discuss karne wale hain.
Doston I personally find commodity markets very fascinating. While looking at commodity markets online, did you realize that hundreds of years pehle, jab merchants ships mein ek country se doosri country tak goods sell karne jaate the, that was a form of commodity trading too? That’s right - commodity trading is technically older than most forms of currencies - jab banks aur gold coins ko currency ke roop mein use nahi kiya jaata tha, toh people used to trade commodities for commodities.
Today, however, commodity trading ka landscape bahut different hai - because if you are planning to do commodity trading, you don’t need ships or trucks or inventories anymore, because commodity trading has now gone digital - and you can buy and sell tonnes of commodities digitally, without ever seeing or touching them.
So do you want to give your trading journey a fresh start with commodity trading? Toh follow these three steps to kickstart the new year with a thoughtful and planned entry to commodity markets.
Number 1 - Sabse pehle, choose a broker that can help you with commodity trading. Doston commodity trading karne ke liye aapko chahiye ek demat account. Do you know why? Kyunki ye demat account aapko apni securities ko digitally hold karne mein help karega. Think of your demat account as a bank account, jisme aap currency ki jagah commodities, stocks aur currencies hold kar sakte ho. Generally, brokers apne demat accounts ke sign up journey mein aapko commodity trading ke liye opt karne ka option denge. Indicate that you want to do commodity trading with your trading account while signing up for your demat account to avoid any delay in starting with commodity trading. Doston broker select karte hue, unke transaction aur brokerage charges par khass dhyaan den. Open a demat account with a broker that will cost you the least for your trading practice.
Next, number 2 - Commodity trading karne ke liye aapko kuch paperwork submit karna padega. Do you know why doston? Kyunki commodity trading is often conducted with huge margins. Wait a minute - are you confused about what margin means here?
Doston, margin funding ka concept bahut simple hai - if you want to buy a barrel of crude oil in the commodity market, and then sell it after a few days, you can simply pay a small portion of the total cost of the barrel in addition to other transaction and brokerage charges. Jab aap apne commodity ko sell karoge, toh you will get your return on the price difference for that barrel, along with the fraction of ost that you paid while purchasing it - is case mein, margin funding helped you achieve a lot more returns in comparison to the amount of money you paid - this is what margin funding means.
Now that you know what margin funding is, let’s return to commodity trading. Basically, commodity trading heavily utilizes margin funding - isliye, while opening a commodity trading account, expect to do some paper work - chahe aap digitally apply kar rahe ho ya physically. This paperwork is simply for the broker to estimate whether you have a reliable income source in case any liabilities fall upon you as a result of trading.
Isko samajhne ke liye, think about the example we discussed in margin funding - agar aapke commodity trade mein prices downward move hote hain, toh you might suffer a significant loss on your trade - although you paid only a fraction of the money that a barrel of oil, or a kilogram of silver costs, aapko sell karne par losses ke liye apne account se pay karna hoga - if your trade takes an undesired turn, toh it becomes a liability for you to take care of - this is why commodity trading requires you to do some paperwork.
Chaliye, lets move to number 3 - doston, commodity trading account set up karne ke baad, don’t jump the ship immediately. Before starting with real-world commodity trading with real money, practice some paper trading -ya fir simulations, jahan aap apni research ko action mein dekh paao, without putting actual money to work. Commodities trading mein you need to understand how research is conducted for predicting price movements and making intelligent trades that help you grow your funds rather than depleting them. Supply aur demand calculate karne ke tareeke research karen - commodities trading ke basic economics are similar to stock market supply and demand principles, leki the specifics of explaining price movements and information sources on commodity markets will differ. Subscribe to an international newspaper that reports how geopolitical, scientific and cultural trends affect the commodity markets. Binge watch some how-tos and 101s for commodity trading. Learn, learn, and learn more.
And next, number 4 - Understand the supply and demand dynamics of the commodity markets. Doston commodity markets mein aapko international trade patterns research karne padenge. For example, focus on a couple of commodities to begin with - in selecting these commodities, think about markets that you might already be familiar with, or that you are fascinated by. FExample ke liye, agar aap crude oil market ko explore karna chahte ho, toh begin with studying about countries that produce cure oil, top buyers, trade laws regarding the same. Some commodities might be subject to specific international trade laws.
Other commodities might be affected by the larger market. For example, jab stock markets mein instability dekhen ko milti hai, toh precious metals ki proces rise hone lagti hain. Discover the nooks and crannies when you are studying the factors that affect the price movement of a commodity. And if you are coming from a solid stock market experience, toh geopolitical news ko nazarandaaz na karen - in fact events like disasters, change of political leadership, conflicts across international borders can affect commodities prices drastically. Keep all international and national news in your radar, and analyze it the purview of your research on a commodity.
And lastly, number 5 - Commodity trading start karne ke liye aapko apne account ko ek minimum threshold ke beyond fund karna hoga. However, funding your commodity trading account is not just a question of fund allocation, but also of risk exposure - apni complete savings ko commodity markets mein lekar na jaayen - while these markets are a great opportunity for those looking to leverage commodities in addition to stocks, commodity markets are also very volatile - so in addition to placing your bets carefully, don’t forget to allocate your funds wisely - keep them diversified with investments in debt instruments, mutual funds, equity, etc. Commodity markets proper research ke bina risky prove ho sakte hain, so exercise these volatile markets with caution.
However, we already talked about paper trading in one of our previous points - ek virtual trading experience se aap naye markets mein trade karne se nervousness eliminate kar sakte ho. My recommendation to you is to explore commodity markets thoroughly, and don't approach them with a hurry - after all, the start of something big can be tedious, difficult and challenging at the same time. But if you are taking up a new year resolution as we approach the end of 2020, then let it be this - no matter how much effort it requires to explore a new market, don’t leave them out of your radar - take up the challenge, and look beyond equity markets too. If nothing else motivates you to look at commodity trading, then consider the massive jump in prices of gold and silver this year - silver almost gained 68% compared to the prices at the beginning of 2020 - spotting such opportunities will become possible only once you have gained some experience in the commodity markets.
So kick start your new year with a fresh outlook towards commodity trading - Angel One wishes you the very best on this new journey, and hope you find success in your commodity trading practice. Until the next one, goodbye from Angel One!