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Commodity trading has been a cornerstone of India’s financial markets, offering investors exposure to gold, silver, crude oil, agricultural products, and more. With SEBI-regulated exchanges like MCX and NCDEX, traders today can participate in commodities either through intraday trading or positional trading.
But which strategy is better for you? This guide breaks down Intraday vs Positional Trading in Commodities, using real-world market insights, beginner-friendly explanations, and best practices.
Intraday trading means buying and selling a commodity within the same trading day.
Example: A trader buys crude oil futures in the morning expecting a price spike. By afternoon, they exit the trade with a small profit (or loss).
Positional trading involves holding commodities for days, weeks, or months depending on broader trends.
Example: An investor holds gold futures for several weeks, anticipating global uncertainties to drive prices higher.
For new traders, positional trading is generally safer. It provides:
That said, intraday trading can be rewarding if you have the time, discipline, and strategy. Always start small and never risk more than you can afford to lose.
Your choice of broker plays a critical role in both strategies:
👉 Swastika Investmart stands out for:
This makes Swastika a reliable partner whether you want to start with intraday strategies or positional commodity investments.
Q1. Can I start commodity trading without a Demat Account?
No. For delivery-based trades, you need a Demat account linked with NSDL/CDSL. For derivatives like futures, some brokers allow margin trading without holding physical commodities.
Q2. Is commodity intraday trading riskier than equities?
Yes. Commodities like crude oil or silver are highly volatile, making intraday trades riskier than equities.
Q3. Which brokers are best for commodity trading in India?
Brokers like Zerodha, Angel One, Upstox, and ICICI Direct are well-known. Swastika Investmart is trusted for research, advisory, and beginner support.
Q4. Can beginners make money in commodities?
Yes, but only with discipline, research, and risk management. Beginners should start small, preferably with positional trading.
Both intraday and positional trading in commodities have their advantages. Intraday offers quick opportunities but comes with higher risks. Positional trading allows you to ride long-term trends with less stress.
For Indian investors, the key lies in aligning your strategy with your risk appetite, time availability, and knowledge level. And most importantly, trading with a SEBI-regulated, trustworthy broker like Swastika Investmart ensures safety, support, and research-driven guidance.
If you've ever wondered how investors make money by predicting the future movements of stocks, commodities, or indexes, then you're in the right place. In this beginner's guide, we'll explore what futures and options are, how they work, and how you can get started in trading them.
Let's start with futures. A futures contract is a legal agreement to buy or sell a particular asset at a predetermined price on a specified future date. These assets can include commodities like gold, oil, or agricultural products, financial instruments like stocks or indexes, and even currencies.
While leverage can amplify gains, it can also magnify losses, so it's crucial to manage risk carefully when trading futures.
Now, let's dive into options. An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified time frame.
Futures and options trading can be a lucrative venture for those willing to put in the time and effort to learn. While these financial instruments offer opportunities for profit, they also come with inherent risks. By understanding the basics, developing a solid trading plan, and practicing prudent risk management, you can increase your chances of success in the futures and options trading.
Investing in the stock market can be both exciting and daunting, especially for beginners. One of the keys to successful investing is having a clear strategy for managing risk and setting realistic targets. In this blog, we'll discuss two essential concepts for every investor: Stop Loss and Target, and how mastering these can help navigate the market with confidence.
Stop Loss is a risk management tool acts as a safety net to limit your losses. It involves setting a predetermined price level at which a stock will be automatically sold to prevent further losses.
Let's say you buy shares of a company at ₹100 per share. You decide to set a Stop Loss at ₹90. If the stock price falls to ₹90 or below, your shares will be sold automatically, helping you minimize losses and preserve capital.
The market is unpredictable. A sudden news event or industry shift can send stock prices dropping sharply. A stop loss ensures you don't hold onto a losing position forever.
Now, let's talk about the flip side profits! setting a target allows investors to lock in profits and define the desired outcome of a trade. A Target is the price level at which an investor aims to sell a stock to realize gains. It helps investors maintain discipline and avoid getting greedy or holding onto positions for too long.
Greed can be a powerful emotion. You might wait for a higher price, only to see the stock price fall. A target price helps you:
Now that we understand the basics let's explore some tips for setting effective stop loss and target prices:
You invest ₹5,000 in 25 shares of PQR Ltd. at ₹200 per share. Here's how to use stop loss and target price:
The price of PQR Ltd. rises, reaching ₹260. Your limit order for the target price gets triggered, and your shares are sold automatically. Here's the breakdown:
Unfortunately, the market takes a downturn, and PQR Ltd.'s price falls sharply. Your stop loss order activates at ₹180, limiting your losses. Here's the breakdown:
Even though the price dropped, your stop loss prevented a bigger loss. This saved capital can be used for future investments.
As you gain experience, consider exploring these advanced techniques:
Stop loss and target price are not guarantees, but they are powerful tools for managing risk and maximizing returns. By understanding and applying these concepts, you'll become a more confident and informed investor in the dynamic Indian stock market. Remember, successful investing is a marathon, not a sprint. Discipline, risk management, and continuous learning are key to achieving your financial goals.
In the dynamic world of the stock market, traders employ various strategies to capitalize on market movements and generate profits. One such strategy that has gained popularity among traders is positional trading. But what exactly is positional trading, and how does it differ from other trading approaches? In this blog, we'll break down the basics of positional trading in simple language, exploring its meaning, strategies, and key differences from other trading styles.
Positional trading is a trading strategy where traders hold positions in stocks or other financial instruments for an extended period, typically ranging from several days to several weeks or even months. Unlike day trading, which involves buying and selling securities within the same trading day, positional traders aim to capture larger price movements over a more extended timeframe.
In positional trading, traders take positions in anticipation of sustained price movements in the market. They base their trades on thorough analysis of market trends, technical indicators, and fundamental factors, aiming to ride the trend for maximum profit potential. Positional traders are less concerned with short-term fluctuations and focus instead on the broader market direction.
Positional traders employ a variety of strategies to identify profitable trading opportunities. Some common positional trading strategies include:
In the context of trading, the term "position" refers to the specific securities or contracts that a trader holds in their portfolio at any given time. It represents the trader's exposure to the market and can include both long (buy) and short (sell) positions. "Holding," on the other hand, refers to the act of retaining ownership of securities over an extended period, irrespective of short-term price movements.
An open position in the stock market or trading refers to a trade that has been initiated but not yet closed. It represents the trader's current exposure to the market and can result in either profits or losses depending on subsequent price movements. Traders may choose to close their open positions to realize gains or cut losses.
While both positional trading and swing trading aim to capture trends in the market, there are some key differences between the two approaches. Positional trading involves holding positions for a more extended period, often weeks or months, to capitalize on broader market trends. In contrast, swing trading typically involves holding positions for a shorter duration, ranging from a few days to a few weeks, to capture shorter-term price swings within the trend.
Positional trading offers traders the opportunity to capitalize on sustained market trends and generate profits over the medium to long term. By understanding the basics of positional trading, employing effective trading strategies, and managing risk appropriately, traders can harness the power of this approach to achieve their financial goals. Whether you're a seasoned trader or just starting, incorporating positional trading into your trading arsenal can provide you with a valuable tool for navigating the dynamic world of the stock market.
Remember, successful positional trading requires patience, discipline, and a thorough understanding of market dynamics. Stay informed, stay focused, and stay committed to your trading plan as you embark on your positional trading journey. With diligence and perseverance, you can unlock the potential of positional trading and take your trading to new heights.
Happy trading!
Ever wished you could lock in a stock price today to buy or sell it later? That's futures trading in a nutshell! It's like making a deal beforehand, saying "I'll buy this stock at ₹17,000 in 2 months," no matter what the price actually is then.
Imagine a contract that allows you to agree on a price today to buy or sell a specific asset (like a stock index) at a predetermined future date.
While both futures and options are derivative instruments, key differences exist:
A deposit required by the broker, typically a percentage of the contract value, to initiate a futures trade. It acts as a good faith deposit and reduces counterparty risk. (Example: A Nifty 50 contract with a lot size of 50 and a current price of ₹17,000 might require a 10% margin, which translates to ₹85,000).
Let's analyze a hypothetical futures trade to understand the concepts better:
Scenario: You believe the price of Reliance Industries (RIL) will rise due to an upcoming positive earnings report. On 1st March 2024, you buy a Reliance Futures contract (expiry date: 30th April 2024) at a price of ₹2,500 per share. The lot size for Reliance futures is 100 shares, and your broker requires a 15% margin.
Calculations:
Outcome 1: Successful Trade
Outcome 2: Unsuccessful Trade
With thousands of futures contracts available in the market, it's essential to choose the right one for your trading strategy.
Consider factors such as liquidity, volatility, and expiration dates when selecting a contract. For example, if you're interested in trading agricultural commodities, you might consider contracts for wheat, rice, or soybeans.
Futures trading can be a thrilling way to potentially multiply your gains in the Indian stock market. But always prioritize knowledge, manage risks, and never invest more than you can afford to lose.
Happy trading!
Welcome to the world of stock market trading! If you're just starting out, you might feel overwhelmed by all the different terms and strategies. Two strategies you might hear about are Bracket Orders and Cover Orders. In this easy-to-understand guide, we'll explore what these strategies are, how they work, and when you might use them.
Imagine you're at a carnival playing a game where you have to knock over targets. You set up your throw, and if you hit the target, you win a prize. But you also set up a safety net behind the targets just in case you miss.
That safety net is a bit like a Bracket Order in trading. Here's how it works:
Imagine you want to buy shares of a company called XYZ, which is currently selling for ₹100 per share. You set up a Bracket Order like this:
If the stock goes up to ₹110, you sell and make a profit. If it drops to ₹90, you sell to prevent big losses. Otherwise, your initial order stays active until you cancel it.
Now, let's talk about Cover Orders. Think of it like going to a restaurant and ordering a meal with a backup plan. Here's how it works:
Imagine you want to buy shares of XYZ, currently selling for ₹150 per share. You set up a Cover Order like this:
If the stock drops to ₹140 or below, your trade automatically sells to prevent further losses. Otherwise, your market order executes at the current price.
Let's compare these two strategies in simple terms:
Both Bracket Orders and Cover Orders are like safety nets for your trades, helping you manage risks in different ways. Bracket Orders are more like setting specific goals with backup plans, while Cover Orders are more straightforward with a backup plan only.
As a beginner, it's essential to understand these strategies and when to use them. Whether you're aiming for specific goals with Bracket Orders or seeking simplicity with Cover Orders, always remember to manage your risks and make informed decisions.
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