BRIEFLY DISCUSS ABOUT NCDEX EXCHANGE:
The abbreviation of NCDEX is – National Commodity and Derivative Exchange. This is a national level on-line multi commodity exchange of India, which commenced operations on December 15, 2003. This is a public company Ltd. providing superlative commodity exchange stage enabling traders in the commodities market to be part of the extensive range of commodity derivatives.. The Exchange has eight shareholders Canara Bank, CRICIL Limited, ICICI Bank Limited, IFFCO, LIC, NABARD, NSE and PNB. The agricultural commodity traders will benefit by trading in agricultural products by knowing the basics on this exchange and commodities. It is indeed vital to know the way agricultural products are valued.
Today everyone from businessmen to farmers is seeing trading in commodities markets. The main dealings of NCDEX include the provision of a fine policy for the trading of agricultural products. It provides a good experience for traders by covering both technical competence and market-friendly features. This ensures a rich agricultural commodity exchange.
The exchange of 36 agricultural commodities is actually facilitated in NCDEX. The major ones are Cashew, Castor core, chick, coffee, cotton, cotton seed cake, palm oil, crude oil, expeller mustard oil, gold, guar gum, guar beans, This highly flexible approach allows you to overweight or underweight a commodity or a category to benefit from movements within cycles, and hence generate additional gains.
This means that funds can avoid investing in commodities that might not keep up with the overall trend. You should not invest directly in the commodity markets. Most of the portfolio is invested in funds or certificates that aim to replicate the RICI index or its sub-indexes.
Jute sacking bags, iron alloy ingots sweet buds Mulberry Green, Pepper, Rapeseed – Mustard Seed, raw jute, RBD, refined soybean oil, rice, rubber, sesame seeds, silk, silver, soybeans, sugar, Turmeric, Black MATP, wheat, yellow peas, yellow corn meal soybean Red and yellow. On the whole 57 commodities are recorded at the exchange including agricultural products, gold, energy, ferrous metals, ferrous metals and plastics.
These are some basics on that compose it. Now is the theme of thinking that the way agricultural products are valued not by any amount to the value of money is good for trade cornerstone online. They are vague, because each and every one of the agricultural commodities online is surrounded by NCDEX. These basic things to trade in are to have the placement fee and the order in which they will provide.
WHY SHOULD YOU INVEST IN NCDEX?
There are many reasons to invest in commodities:
• Transparency and Fair Price Discovery – Trading in commodity futures is transparent and a process of fair price discovery is ensured through large-scale participation.
• Hedging – It provides a platform for producers to hedge their positions according to their exposure in physical commodity.
• No Insider Trading – Dealing in commodities is free from the evils of insider trading. Besides, there are no company specific risks as those seen in stock markets.
• Simple Economics – Commodity trading is about the simple economics of demand and supply. More the demand for a commodity higher is its price and vice versa.
• Trade on Low Margin- Commodity Futures traders are required to deposit low margins, roughly 5 to 10% of the total value of the contract, much lower compared to other asset classes. The low margin, which again varies across exchanges and commodities, facilitates the taking of large positions at lower capital.
• Seasonality Patterns -Quite often provide clue to both short and long term players.
No Counter party Risk Much like the exchanges in the equity market, Commodity Futures market have Clearing Houses, which guarantee that the terms of the contracts are fulfilled, thereby eliminating the counter party risk.
• Wide Participation- The emergence of online trading would enable growth in the commodity market, much akin to the one seen in the equity market. It would also ensure bringing the market closer to both, the user and the trader.
• Evolved Pricing-The rise in participation would decrease the risk of cartelization, ensuring a holistic view on the A right procedure to invest in a commodity market is to use a semi-active investment in order to take advantage of cycles in the commodity market.
PROCEDURE FOR NCDEX TRADING:
A right procedure of this trading is to use a semi-active investment in order to take advantage of cycles in the commodities market.Initially, you must carry out qualitative research with the aid of quantitative models to establish which commodity or category offers the greatest potential. You should take the advice from a trustful advisory company. This highly flexible approach allows you to overweight or underweight a commodity or a category to benefit from movements within cycles, and hence generate additional gains. This means that funds can avoid investing in commodities that might not keep up with the overall trend. You should not invest directly in the commodity markets. Most of the portfolio is invested in funds or certificates that aim to replicate the RICI index or its sub-indexes commodity. Hence, pricing would be more practical and less irrational leading to Fair Price Discovery Mechanism.
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