International School of Financial Markets Commodity Market Module Reg. office : Plot no. 152 - P (LGF), Sec – 38, Medicity Road, NR Medanta Hospital Phone : 0124-2200689, +91 7015237224, +91-8168573253 +91 8368025252 Web: www.isfm.co.in , Email : [email protected]
Commodity Trad Commodity Tra
ding Course ading Course
Name Email Id Mobile No. Sr. No. Session Name Sub Topics What is Commodity Market, Structre of Comm Market, What is Stock Exchange 1 Introduction to Participant of Commodity Market, Roles and Commodity Market responsibilites Major Stock Exchange in Commodity Market Major source of information in Commodity M Top 5 Website, Top 5 apps to use What is E Gold Trading Contracts What is E Silver Trading Contracts How to Trade in Mini Gold and Silver 2 Bullions Market How to understand MTM in live market Live Case Studies of Commodity Market What is Rollover and how to use it for Arbitrag opportunity How to track bullions using world market What are major products in Metal Market How to trade in Copper using LME Exhange an data What is spread trade and how to make profit i market 3 Base Metal Market Major pair and their lot size and its features How to track demand and supply of Metal in C Market How to find fair value of Commodity Future How to trade in Metal Market using Technical make strategy
Course Name DD……...MM……...YY……….. Batch No. Remarks Duration Time Presented by modity 2 Hours Sushil Market Alewa 2 Hours Sushil Alewa ge nd China Sushil Alewa in live 2 Hours Commodity l Chart and
How to install trading software Major key use in software What is stop loss in market, how to use it in liv 4 Order Management Major types of order in market Major condition in buying and selling of shares What is margin trading facility in market How to use leverage in Commodity Market What is Crude Oil Contract in Commodity Mar How to trade Crude Oil using Technical Analys How to track Crude Oil using inventory level fr marke and Opec Country What is Natural Gas contract in Commodity M 5 Energy Market How to trade in Natural Gas using Technical A How to track Natural Gas using inventory from market and Russia How to get profit from Arbitrage opportunity and Natural Gas yearly contracts How to Get profit from Eqiuty Market using Co Market data Pure practical session 6 Commodity Market * Please carry your laptop everyone Live Class Everyone must have demat a/c before joining Live Commodity Market classes
ve market 2 Hours Anil Mor s rket sis rom world Market 2 Hours Sushil Analysis Alewa m world in Crude Oil ommodity g session 2 Hours Anil Mor
Introduction to Commodity
Market
Benefits of Commodit 3 Transparency and Lowe Fair Price Discovery Seas Standardized Pa Contracts Online/Off line Protect Trading platform inf
ty Trading er Margins Wide Participation sonality No scope for atterns Manipulation tion against Pure Economics flation www.isfm.co.in 24 May 2022
Nature of Commodity 4 Seasonal • Seasonal c trading in Correlation • Commodit correlated Weather • Weather i market to Economic • Response inflation,
y Trading commodities available for n the market ties are positively & negatively within & outside the group influences the commodity o a large extent e to geo political tensions, recessions etc. Eg-GOLD www.isfm.co.in 24 May 2022
Trading Opportunities • Speculators As an can use Investment different strategies to • Investors can take build and advantage of diversify their rising and portfolio declining prices. “Going Long,” P“GuoreingTrSahdoirnt”g
s… • Spreads Arbitrage involve taking Opportunities advantage of the price • Inter-exchange difference – NCDEX and between two MCX different contracts of • Spot – Futures the same (Cash and commodity Carry) Calendar Spread Trading
Players in Commodity 6 Action Price Disc Players Follow Futures Prices Farmers Follow Futures Prices Producers Follow future price's Manufacturers Follow Futures prices Purchasers Price Risk Ma Farmers Sell in futures for upcoming c Farmers & Traders Sell in futures for Stored Qua Agro Lenders Sell in futures for value of cr exposure. Exporters Importers Buy in futures for Export Comm Domestic Producer Sell in futures for Import comm Domestic Users Sell in futures for Output requir Buy in futures for Input require Investors Liquidity S Speculators Invest based on cheap valu Speculate on High Intra and I Seasonal price variation
Market Benefit covery Decide on cropping Decide on Production intent Decide on manufacturing intent. Decide on procurement intent anagement crop Protection against price fall antity Protection against price fall redit Protection against NPA in the event of default by borrower due to falling price of commodity mitment Protection against price rise mitment Protection against price fall rement Protection against price fall. ements Protection against price rise Seekers uInet.erwww.isfmH.icgoHh.iinpgrhoPf2irt4opfMirtoraepbyaraol2bibz0iala2itbt2iyiolointn.y on value right market n prediction
Contribution in Global land Indian Share in Global Commodity Market 9% 91% Global India
dscape Global Vs. India Global commodity has relatively long history India Commodity futures, though active since 19th century was banned later in 1970’s Commodity volumes surged significantly after re-launch in 2003. MCX emerged as world's largest exchange in silver and gold futures, second largest in copper, natural gas futures, and the third largest in crude oil futures in 2012.
Basis General meaning of ‘derivatives’ By Product Imitative Unoriginal What are ‘Financial’ derivatives? Instruments (tools) whose value (price) depends on Underlying can be Commodities like gold, wheat, crude oil, Currencies eg. US dollar, Euro Stocks eg. Infosys, Reliance, stock indices like BSE S Weather products on rainfall, temperature, etc. Govt.securities
the prices of underlying Sensex
As defined in the RBI gui A derivative is a financial instrument: whose value changes in response to the price, commodity price, foreign exchang rating or credit index, or similar variabl (b) that requires no initial net investmen relative to other types of contracts t market conditions; and (c) that is settled at a future date.
idelines e change in a specified interest rate, security ge rate, index of prices or rates, a credit le (sometimes called the 'underlying') nt or little initial net investment that have a similar response to changes in
Commodity Futures contr A commodity futures /forward contract is a binding agreem take (by the buyer) delivery of the underlying commodity a A commodity futures exchange is a central marketplace wit to trade futures and options on futures contracts of commod In contrast to the forward / cash market, futures exchanges Rules of conduct An organized marketplace Standardized trading A focal point for collection and dissemination of information A mechanism for settling disputes among traders without re Guaranteed settlement of contractual and financial obligat
ract & Exchange ment between a seller and a buyer to give (by the seller) and to at a specified future date with agreed upon payment terms. th established rules and regulations where buyers and sellers meet dities. s provide: n esorting to costly and often slow legal systems tions
Commodity Futures: Linking
g Multiple Stakeholders www.isfm.co.in 24 May 2022 11
Some important industry Hedger: A corporation/individua market to ‘lock in’ the price of its farmer sells wheat futures to pro prices after the crop is ready. An buying a futures contract to prot What is Hedging? Hedging means taking a position opposite to an exposure in the p reducing or limiting risks associa
y participant types al that participates in the futures s produce or input. For example, a otect herself from a possible fall in nother example is a dal mill owner tect herself from rise in prices. n in the futures market that is physical market with the objective of ated with price changes.
Lesson – 2 Major Par 13
rticipants www.isfm.co.in 24 May 2022
Some important particip Speculator: A person who trades derivatives large risks, especially with respect to anticip making gains. In return speculators provide t hedgers hedging demand. Arbitrageur: One who engages in arbitrage another in the hope of profiting from the pric the market. Jobbers: They buy and sell derivatives in hop thrive on very thin margins and hardly keep They are one of the biggest liquidity provide
pant types s with an expectation of a profit. Speculators take pating future price movements, in the hope of the market with important liquidity and absorb the (purchasing in one market for immediate resale in ice differential). Their activity also adds liquidity in pe of making gains on few tick movement. They their positions open for more than a few seconds. ers in the market.
Commodity Hedging Hedging is a popular price risk m used as a preferred instrument b who have an exposure to the ph Hedging is the strategy of offse spot market by taking an equal market. The idea is to offset the other market. It also helps the stakeholder in m put in place efficient modern inv business more sustainable, profit
management mechanism which is by a large number of stakeholders, hysical commodity. etting price risk that is inherent in the but opposite position in the futures loss in one market with profit in managing his inventories better and ventory control systems to make his table and competitive.
Lesson – 3 Major Sto 16
ock Exchanges www.isfm.co.in 24 May 2022
Major Exchange 17 Two Major Commo In MCX (Multi Commod NCDEX (National Co Derivatives Exchang
odities Exchange in ndia dity Exchange) ommodities & ge www.isfm.co.in 24 May 2022
MCX (Multi Commodity Exc Multi Commodity Exchange of India Ltd commodity futures exchange. The demu recognition from the Government of Ind and settlement operations for commodit MCX offers more than 40 commodities a ferrous and non-ferrous metals, energy, platform. The Exchange introduces stand platform. MCX has been certified to three ISO sta Management System standard, ISO 140 System standard and ISO/IEC 27001:2 System standard.
change) d (MCX) is a state-of-the-art electronic utualised Exchange has permanent dia to facilitate online trading, and clearing ty futures across the country. across various segments such as bullion, , and a number of agri-commodities on its dardized commodity futures contracts on its andards including ISO 9001:2008 Quality 001:2004 Environmental Management 2005 Information Security Management
19
www.isfm.co.in 24 May 2022
NCDEX National Commodity & Derivatives professionally managed on-line mul shareholders of NCDEX comprises o public sector bank and companies. NCDEX is a public limited company the Companies Act, 1956. It obtaine Business on May 9, 2003. It commen 2003. NCDEX is regulated by Forward Ma to various laws of the land like the F Companies Act, Stamp Act, Contrac
Exchange Limited (NCDEX) is a lti commodity exchange. The of large national level institutions, large incorporated on April 23, 2003 under ed its Certificate for Commencement of nced its operations on December 15, arkets Commission. NCDEX is subjected Forward Contracts (Regulation) Act, ct Act and various other legislations.
Key Participants of Futu Hedgers (Commercials) Deal in physical commodity and wants protection against adverse price movements Farmers Processors Producers Exporters Importers Traders
ures Markets Non-Commercials Speculators No exposure to price movements in commodity Wants to profit from price swings Day traders, Scalpers Arbitragers (Spreaders) Exploits price imbalances between two markets (eg. Spot & futures)
India’s TOP Commodity E National Multi-Commodity Exchange (NMCE). Multi Commodity Exchange (MCX). Indian Commodity Exchange ICEX. ACE Derivatives and Commodity Exchange ACE
Exchanges
Evolution of Commodity
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