Best Brokers for Commodity Trading

Best Brokers for Commodity Trading

Last Updated: Jan -21-2020

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Commodity trading as the name suggests involves the trading of certain commodities or products such as metals, gold, silver, agricultural (grains, pulses, spices, oils, and oil seeds), energy, or livestock. Commodity products mainly trade in derivative Futures and Options (FnO).

Commodity trading is very different from the other trading types such as equity or bonds or ETFs. For commodity trading, traders need a small amount of capital due to higher margin, some of the commodity products require as less as 5% of actual contract value. When market makes small move, you tend to see bigger returns or losses in your account because of large leverage.

India’s largest stock exchanges- NSE & BSE ventured into commodity trading in October 2018. NSE & BSE has the ability to reach every corner of the country through their network of stock brokers. This will probably help popularize commodity trading in India. However, one needs to understand that the returns from commodity trading depend on the price change of the commodity and its demand and supply. Below listed are some of the advantages of commodity trading.

Less volatile than equity trading
Offers exposure of global market
Aid in portfolio diversification
Hedge against other Asset class
Perform better during periods of inflation
Offer extended trading timings

The Commodity trading market is regulated by SEBI. In India, commodity trading can be done through four major commodity exchanges, Multi-Commodity Exchange (MCX), and National Commodity and Derivative Exchange (NCDEX), National Stock Exchange (NSE)&Bombay Stock Exchange (BSE).

In order to start commodity trading you need to choose a broker, open an account, and make a minimum initial investment. Although these might seem as simple steps, the most complex of all is choosing the best broker for commodity trading. Careful selection of the best broker will save your time and money. Make sure that your choice of broker should suit your preferences and match your expectations. The broker should be a member of major commodity exchanges. Once you find the right broker, rest of the steps are simpler to follow.

Generally, the brokers who are associated with banks do not offer services in commodity trading. On the other hand, full-service brokers offer commodity trading and additional services like research reports, tips and recommendations for investors to understand the market and make informed decisions. Usually, full-service brokers are expensive, they charge percentage on your trading volume. The discounts brokers mostly don’t provide research reports, but their pricing models are very attractive. They charge as less as flat Rs. 20 per executed order irrespective of numberof lots (volume). After an extensive market research,www.Investyogi.com brings you a list of some of the best brokers who have made their mark in commodity trading.

1. ShareKhan

ShareKhan is a full service stock broking firm which has presence in 1700 cities and towns of India.

Pros:

A decent performance-based mobile app
Satisfactory customer support
Provides sufficient research and recommendations

Cons:

Account opening and brokerage charges are high

Check out the complete review of ShareKhan here.

OPEN ACCOUNT IN SHAREKHAN

2. Zerodha

Zerodha is a popular discount broker in India. Within a short span, they have been able to capture a major market share.

Pros:

Low brokerage
Well designed trading platforms (Zerodha Pi, Zerodha Kite, Zerodha Kite Mobile, etc.)
Provide accurate tips and information regarding trading

Cons:

Average exposure values for day trading
Customer service is not satisfactory

Check out the complete review of Zerodha Securities here.

OPEN ACCOUNT IN ZERODHA

3. Upstox

Upstox (formerly known as RKSV Securities) is the second largest discount broker in India offering Equity, Currencies, & Commodity trading services at BSE, NSE, & MCX. This stock broking firm was launched in the retail trading segment in January 2012 by 3 founders namely Raghu Kumar, Ravi Kumar and Shrinivas Viswanath and has been backed up by some of the prominent names such as Ratan Tata, Kalaari Capital, and GVK Davix. Upstox offers competitive brokerage charges similar to Zerodha in the league of discount brokers by offering equity Investment for brokerage free and 0.01% or Rs 20, whichever is lower per executed order for all other segments be it equities intraday, currencies, FnO, or commodities.

Free Equity Delivery Trading
Rs 20 or 0.01% which ever is lower for Equity Intraday, F&O, Commodity and Currency

Check out the complete review of Upstox here.

OPEN ACCOUNT IN UPSTOX

4. Angel Broking

Angel Broking is one of the oldest names in the Indian stock broking industry.

Pros:

High-quality tips and recommendations provided through online platform (email, SMS, WhatsApp)
Wide offline presence in India
Offer high performance trading platforms (Angel Broking Speed Pro, Angel Broking Mobile App, etc.)
Offer a diversified range of trading products