A Definitive Guide on Commodity Trading.
                     A DEFINITIVE GUIDE ON 
COMMODITY TRADING
INTRODUCTION
• There are six major commodity trading 
exchanges in India as listed below.
1. Multi Commodity Exchange – MCX
2. National Commodity and Derivatives 
Exchange – NCDEX
3. National Multi Commodity Exchange – 
NMCE
4. Indian Commodity Exchange – ICEX
5. Ace Derivatives Exchange – ACE
6. The Universal Commodity Exchange – 
UCX
Source: www.angelbroking.com
WHERE TO INVEST IN 
COMMODITIES?
• Commodity trading is one of the 
foundations for the global trading 
system that trades various commodities 
from primary economic sector which 
act as building blocks for production. 
• These are raw materials standardized 
and interchangeable with other goods.
Source: www.angelbroking.com
COMMODITY 
CLASSIFICATION
• In general, commodities are classified 
into four types:
1. Metals – Silver, Gold, Platinum, and 
Copper
2. Energy – Crude oil, Natural gas, 
Gasoline, and Heating oil
3. Agriculture – Corn, Beans, Rice, Wheat, 
etc.,
4. Livestock and Meat – Eggs, Pork, Cattle, 
etc.,
Source: www.angelbroking.com
HOW TO TRADE 
COMMODITIES
• There are a few different ways to trade 
commodities in your portfolio, with 
their own advantages and 
disadvantages.
Source: www. forbes.com
COMMODITIES FUTURES
• The most common way to trade 
commodities is to buy and sell contracts 
on a futures exchange. 
• The way this works is you enter into an 
agreement with another investor based 
on the future price of a commodity.
Source: www. forbes.com
PHYSICAL COMMODITY 
PURCHASES
• For precious metals like gold and silver, 
individual investors can and do take 
possession of the physical goods 
themselves.
• These investments give you exposure to 
commodity gold, silver and other 
precious metals and let you feel the 
actual weight of your investments.
Source: www. forbes.com
COMMODITIES STOCKS
• Another option is to buy the stock of a 
company involved with a commodity. 
• For oil, you could buy the stock of an oil 
refining or drilling company; for grain, 
you could buy into a large agriculture 
business or one that sells seeds.
Source: www. forbes.com
COMMODITIES ETFS, MUTUAL 
FUNDS AND ETNS
• There are also mutual funds, exchange 
traded funds (ETFs) and exchange 
traded notes (ETNs) that are based on 
commodities. 
• These funds combine the money from 
many small investors to build a large 
portfolio.
Source: www. forbes.com
COMMODITY POOLS AND 
MANAGED FUTURES
• Commodity pools and managed futures 
are private funds that can invest in 
commodities. 
• They are like mutual funds except many 
of them are not publicly traded, so you 
need to be approved to buy into the 
fund.
Source: www. forbes.com
SHOULD YOU INVEST IN 
COMMODITIES?
• Commodity investing is a strategy that’s 
best for sophisticated investors. 
• Before making any trades, you need to 
carefully understand the commodity 
price charts and other forms of 
research.
Source: www. forbes.com