In commodity market any individual work and receive a good return from the market. In MCX market you buy or sell the contract of different commodities that gives you an extra investment opportunity as well as delivery cost, transportation cost, and other costs also reduces,
Investing in the market is subject to the market risk but it doesn’t mean that you can not receive a good return form the market. The benefits that you will receive by trading on commodity exchange may be extra investment opportunity as well as delivery cost, transportation cost, and other costs also reduce.
You can understood the commodity market as follow.
As we know that commodities are the raw or primary product that could be satisfied the need like Soybean, gold silver and base metals. As every person want to generate a secondary source of income. In India Commodity Market is a market where different commodities are traded on its derivative contract. Derivative are the contract whose value is derived from the underlying asset or the contract where delivery of security or commodity held on specific future date.
Like a stock market NSE provide a platform to trade in different shares, for commodities MCX market and NCDEX are the Exchange in which trading on commodity derivative contract held.
MCX market (Multi Commodity Exchange ) mainly known for the trading of
- Bullion metals i.e. Gold, Silver and also platinum
- Base Metals (Zinc, Aluminium Lead, Nickel, Coper, )
- Energy(Crude Oil and Natural Gas)
And NCDEX(National commodity derivative Exchange) mainly known for trading in Derivative contract of agricultural Produced like Refsoyaoil, Rm seed,Guarseed, Chana, Dhaniya .
As all this commodities are traded on its future contract that has a specific expiry date of that contract and each individual can buy or sell a specific quantity of a individual commodity.
What is the commodity lot size? Do we have to make full payment of lot size?
Different Commodities has different lot size
Gold -100, Silver-30, Zinc Aluminium and Lead has lot size of 5000 and Coper-1000 , Nickel-250, Crude Oil- 100 and Natural Gas has lot size of 1250.
To purchase a single lot of a commodity, you doesn’t have to pay full amount you just have pay a margin amount that is decided by the Exchange.
Like if you want to buy 1 lot of Zinc September Contract and its CMP is 153.20 than
153.20*5000= 766000 * 4–8% would be the investment.
For a beginner a proper knowledge about the mcx market is most important as Bullion, Base Metals and Energy are the international commodities
Thus there are so many factors Like Import and Export, Demand of a Commodity in International Market, Value of Currency and off course the technical analysis play a vital role for investment according to his or her risk. for beginner it is better to work with proper Invest adviser guidance.
What is The MCX Market Support and Resistance?
MCX Support levels are used to indicate the points at which a stock might not fall below or not trade above, without a certain amount of difficulty. At these levels, a stock may see some support, or might break right through it on its way to either new lows or highs of level. This is very usefull to get more decision making for prediction of high low for any commodity elements.
Support and resistance is a concept in technical analysis that the movement of the price of a security will tend to stop and reverse at certain predetermined price levels. Support and resistance levels are areas where prices may stop and turn. Knowing where this might happen helps you enter and exit your trades at the most profitable times. Support and resistance levels are not precise price points. Rather, they are general price ranges
Support and Resistance Basics
The concepts of support and resistance are undoubtedly two of the most highly discussed attributes of technical analysis. Part of analyzing chart patterns, these terms are used by traders to refer to price levels on charts that tend to act as barriers, preventing the price of an asset from getting pushed in a certain direction. At first, the explanation and idea behind identifying these levels seem easy, but as you’ll find out, support and resistance can come in various forms, and the concept is more difficult to master than it first appears.
Technical analysts use support and resistance levels to identify price points on a chart where the probabilities favor a pause, or reversal, of a prevailing trend.
Support occurs where a downtrend is expected to pause, due to a concentration of demand.
Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of supply.
Market psychology plays a major role as traders and investors remember the past and react to changing conditions to anticipate future market movement.
Defining Support, Resistance
Support is a price level where a downtrend can be expected to pause due to a concentration of demand. As the price of assets or securities drops, demand for the shares increases, thus forming the support line.1 Meanwhile, resistance zones arise due to a sell-off when prices increase.
Once an area or “zone” of support or resistance has been identified, it provides valuable potential trade entry or exit points. This is because, as a price reaches a point of support or resistance, it will do one of two things—bounce back away from the support or resistance level, or violate the price level and continue in its direction—until it hits the next support or resistance level.
Most forms of trades are based on the belief that support and resistance zones will not be broken. Whether the price is halted by the support or resistance level, or it breaks through, traders can “bet” on the direction and can quickly determine if they are correct. If the price moves in the wrong direction, the position can be closed at a small loss. If the price moves in the right direction, however, the move may be substantial.