Commodity Market trading: Myths v/s Reality

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Commodity Markets Myths v/s Reality
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Description

• The Indian online commodity futures trading
  markets have been around for a decade and a half
  and still there is a sense of discomfort about
  them in the minds of some of the investors. This
  is particularly true of the individual retail
  investors who are not willing to participate in
  the commodities market due to a lot of factors
  which are nothing but myths. In fact, the overall
  volumes and liquidity in the local commodity
  derivatives market is likely to improve
  tremendously in coming months as the Securities
  and Exchange Board of India (SEBI) has recently
  allowed mutual funds and portfolio managers to
  invest in commodity derivatives.

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Myths About The Commodities Market

• It is all about speculation Most of the
  investors feel that commodity trading is
  undertaken by traders only for speculative
  purposes. However, there is more to the commodity
  derivatives than pure speculation. All financial
  markets consist of hedgers, arbitrageurs and
  speculators, helping in efficient price discovery
  and price-risk management. In this regard, the
  commodities function pretty much like stock
  markets. Also it is important to note that
  speculation does not necessarily mean pure
  gambling. Speculators are important market
  participants who inject liquidity and help
  hedgers transfer their price risk.

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Lack Of Information

• Lack of informationThe price movement in
  commodities is a function of a number of factors
  like demand-supply conditions, global economic
  cues, currency market dynamics etc. For popular
  commodities like Gold, silver, crude oil and base
  metals, it is very much possible to access
  information in this regard from various financial
  news websites and television channels. Most of
  the brokers offering commodity trading also
  provide their own set of research and market
  updates and provide a good support to commodity
  investors.

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Thank You

• Visit https//www.ajmeraxchange.co.in/blogs/commo
  dity-markets-myths-vs-reality