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:
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A decent performance-based mobile app
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Satisfactory customer support
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Provides sufficient research and recommendations
Cons:
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Account opening and brokerage charges are high
Check out the complete review of ShareKhan here.
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:
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Low brokerage
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Well designed trading platforms (Zerodha Pi, Zerodha Kite, Zerodha Kite Mobile, etc.)
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Provide accurate tips and information regarding trading
Cons:
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Average exposure values for day trading
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Customer service is not satisfactory
Check out the complete review of Zerodha Securities here.
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.
4. Angel Broking
Angel Broking is one of the oldest names in the Indian stock broking industry.
Pros:
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High-quality tips and recommendations provided through online platform (email, SMS, WhatsApp)
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Wide offline presence in India
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Offer high performance trading platforms (Angel Broking Speed Pro, Angel Broking Mobile App, etc.)
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Offer a diversified range of trading products
Cons:
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Customer service is not satisfactory
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Funds transfer process is complex
Check out the complete review of Angel Broking here.
5. 5Paisa
5Paisa is a discount trading sector of the India Infoline, functioning completely into full-service stock broking space.
Pros:
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Low brokerage charges
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Decent performance-based trading platforms
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Satisfactory customer service
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Provides intraday trading tips daily
Cons:
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Do not allow commodity trading
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Average exposure values are offered
Check out the complete review of 5Paisa here.
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