Welcome to our insightful column into the world of financial wisdom! In a time where the specter of financial frauds looms large in Kashmir, this column is curated to be your beacon of light, guiding you through the intricacies of money management and investment decisions. Financial literacy is crucial for making informed and effective decisions about managing money, investments, and overall financial well-being. Our aim is to empower individuals to make sound choices and build a secure financial future.
By Irshad Mushtaq
Gold, silver, and copper are three of the most valuable and desirable metals in the world. These metals have been used for centuries as a means of exchange and as a store of value. In recent years, the trading of these metals has become increasingly popular, with the introduction of various financial instruments such as margin trading, futures and options (FNO), and commodity trading.
The Multi Commodity Exchange (MCX) is the leading commodity trading exchange in India, where traders can buy and sell a variety of commodities, including gold, silver, and copper. Margin trading allows traders to trade commodities with borrowed money, amplifying their potential profits but also increasing their potential losses. FNO trading allows traders to hedge their positions and take speculative positions in the commodities markets.
In commodity trading, the lot size refers to the standardized quantity in which a particular commodity is traded. For example, one lot of gold on the MCX may be 1 kg, while one lot of silver may be 30 kg. The lot size is important because it determines the minimum quantity of the commodity that can be traded and the margin required.
MCX also offers a mini version of gold, silver, and copper contracts, which have lower lot sizes compared to their regular counterparts. This allows smaller investors to participate in commodity trading with lower capital requirements.
Expiry refers to the date on which the contract for a particular commodity expires. After the expiry date, the contract is settled, and the trader must either take or make delivery of the underlying commodity or close out their position. It is important for traders to be aware of the expiry date of their contracts to avoid any unnecessary complications.
In conclusion, gold, silver, and copper are valuable commodities that can be traded on the MCX using margin trading, FNO, and other financial instruments. The lot size and expiry dates are important factors to consider when trading commodities on the MCX. These commodities offer significant potential for profits but also carry a high level of risk, making it essential for traders to have a thorough understanding of the market and the various trading instruments available.
- Author is NISM qualified, Mutual Fund advisor and distributor having experience of 18 years in financial market.