How to earn money from Commodity on Day 4

Net Profit Rs 1600/-

Net Profit Rs 1300/-

How to earn money from Commodity Trading on Day3

Net Profit Rs 4500/-

Net Profit Rs 6500/-

Titbits :

According to my observation so far, mcx is managed by well organised BIG guys. If you play along with them, you will be safe, otherwise you are the looser all the time.if you look for small profit, you enjoy the same in intraday. Because BIG profits is not for small traders. Play safe otherwise just watch the PLAY.

Basics of Commodity Trading Day 6

 Mainly These Scripts divided into 3 Categories

1. Base Metals

2. Bullions

3. Energy

1. Base Metals                               2. Bullions                                    3. Energy

Alumini (Mini)                                  Gold (Guinea)                               Crude Oil
Aluminium (Mega)                           Gold (Mini)                                   Natural Gas

CopperM (Mini)                              Gold (Mega)
Copper (Mega)                                 Gold (Petals)
Lead M (Mini)                                   Silver Mic
Lead (Mega)                                     Silver Mini
Nickel M (Mini)                               Silver Mega
Nickel (Mega)
Zinc M (Mini)
Zinc (Mega)
                                                       

Symbol	Lot Size (1 Lot)
ALUMINI	1000 KG
ALUMINIUM	5000 KG
COPPER	1000 KG
COPPERM	250 KG
CRUDEOIL	100 BBL
GOLD	100 Grams
GOLDM	10 Grams
GOLDGUINEA	8 Grams
GOLDPETAL	1 Gram
LEAD	5000 KG
LEADMINI	1000 KG
NATURALGAS	1250 mmBtu
NICKEL	250 KG
NICKELM	100 KG
SILVER	30 KG
SILVERM	5 KG
SILVERMIC	1 KG
ZINC	5000 KG
ZINCMINI	1000 KG

                                                           

How to earn from Commodity Trading 2

Bacics of Commodity Trading. Day 5

Contract Note Ref 2

31. What is rolling over of hedge positions?

Rolling over of hedge position means the closing out of existing position in the futures contract and simultaneously taking a new position in a futures contract with a later date of expiry.

32. What is meant by calendar spread?

A calendar spread means taking opposite positions in futures contract of the same commodity with different expiry dates. It is also known as an intra-commodity spread.

33. What is hedge ratio?

Hedge ratio is the ratio of number of futures contracts to be purchased or sold, to the quantity of cash asset that is required to be hedged. It is calculated as product of the coefficient of correlation between the change in cash prices and the change in futures prices, and the ratio between the standard deviation of the change in cash price and the standard deviation of the change of futures prices of the commodity.

34. What is the significance of hedge ratio?

It is significant because the spot price and futures price may not vary in the same proportion. By using this ratio, one can cover his basis risk, which is the difference between the spot price and futures price.

35. What do you mean by convergence of futures price with spot price?

This refers to the tendency of difference between spot and futures contract to decline continuously, so as to become zero on the date on maturity.

36. What is novation?

Some Clearing Houses interpose between buyers and sellers as a legal counter party i.e., the clearing house becomes buyer to every seller and vice versa. This obviates the need for ascertaining credit-worthiness of each counter party and the only credit risk that the participants face is the risk of clearing house committing a default. Clearing House puts in place a sound risk-management system to be able to discharge its role as a counter party to all participants.

37. What is Cash Settlement?

It is a process of settling a futures contract by payment of money difference rather than by delivering the physical commodity or instrument representing such physical 
commodity (like, warehouse receipt). In India, most of the future trades are cash settled.

38. Are there any circuit breakers in commodities like in equity markets?

Yes, like equity markets, commodity market has circuit breakers. Exchanges have circuit filters in place. The filters vary from commodity to commodity but the maximum individual commodity circuit filter is 6 per cent. The price of any commodity that fluctuates either way beyond its set price limit will fall in circuit breaker category.

39. What kinds of risks do participants face in derivatives markets?

A.Credit risk: Credit risk on account of default by counter party: This is very low or almost zeros because the Exchange takes on the responsibility for the performance of contracts

B.Market risk: Market risk is the risk of loss on account of adverse movement of price.

C.Liquidity risk: Liquidity risks is the risk that unwinding of transactions may be difficult, if the market is illiquid

D.Legal risk: Legal risk is that legal objections might be raised; regulatory framework might disallow some activities.

E.Operational risk: Operational risk is the risk arising out of some operational difficulties, like, failure of electricity, due to which it becomes difficult to operate in the market.

40. Can I take delivery of the commodity? If yes, how can I do the same?

A settlement takes place either through squaring off your position or by cash settlement or physical delivery. Squaring off is taking a opposite position to the initial stance, which means in the case of an original buy contract an investor would have to take a sell contract. 

An investor who intends to give or take delivery would have to inform his broker of the same prior to the start of delivery period. In case of delivery, a warehouse receipt is provided. Delivery is at the option of the seller; a buyer can take delivery only in case of a willing seller. All unmatched/rejected/excess positions are cash settled; all open positions for which no delivery information is submitted are also cash settled. 

Under cash settlement, the difference between the contract price and settlement price is to be paid or received. In online commodity trading, client can not go for delivery & all positions are cash settled.

41. What are the costs involved in trading of commodities?

While trading in commodities, with any registered broker, client has to pay certain charges (apart from margin requirements for trading) which are as follows:

1. Brokerage
2. Service tax
3. Education Cess
4. Exchange Transaction Charges

Basics of Commodity Trading Day 4

21. What is “Contango” in commodity trading?

Contango means a situation, where futures contract prices are higher than the spot price and the futures contracts maturing earlier. It arises normally when the contract matures during the same crop season. In a well-integrated market, Contango is equal to the cost of carry viz. Interest rate on investment, loss on account of loss of weight or deterioration in quantity etc.

22. What is meant by backwardation?

This situation arises when the price of futures contract is below the spot price of the same commodity. This happens when there is a shortage for the underlying asset in the cash market, but also there is an expectation that the supply of the commodity will increase in the future.

23. What is initial margin?

It is the minimum percentage of the contract value required to be deposited by the members/clients to the exchange before initiating any new buy or sell position. This 
must be maintained throughout the time their position is open and is returnable at delivery, exercise, expiry or closing out.

24. What do you mean by delivery period margin?

It is the extra margin imposed by the exchange on the contracts when it enters the concluding phase i.e. it starts with tender period and goes up to delivery/settlement of trade. This amount is applicable on both the outstanding buy and sell positions.

25. What is Mark-to-market (MTM)?

Mark-to-market margins (MTM or M2M) are payable based on closing prices at the end of each trading day. These margins will be paid by the buyer if the price declines 
and by the seller if the price rises. This margin is worked out on difference between the closing/clearing rate and the rate of the contract (if it is entered into on that day) or the previous day's clearing rate. The Exchange collects these margins from buyers if the prices decline and pays to the sellers and vice versa.

26. What is meant by the term “tender period”?

The contract enters into the tender period a few days before the expiry. This enables the members to express their intention whether to give or take delivery.

27. What is due date rate?

It is the rate at which the contract is settled on the expiry date. Usually it is the average of the spot prices of the last few trading days (as specified by the exchange) before the contract maturity.

28. What is spread?

Spread is the difference between prices of two futures contracts of the same underlying commodity. Futures market can be a normal market or an inverted market. If the price of the far month futures contract is higher than the near month one, then it is referred to as “normal market”. On the other hand, if the price of a far month futures contract is lower than the near month one, then the situation can be referred to as “inverted market”

29. What is bull spread in commodity futures?

In most commodities and financial derivatives market, the term refers to buying contracts maturing in nearby month, and selling the deferred month contracts, to profit from the wide spread which is larger than the cost of carry.

30. What is bear spread in commodity futures?

In most of commodities and financial derivatives market, the term refers to selling the nearby contract month, and buying the distant contract, to profit from saving in the cost of carry.

How to earn from Commodity Trading 1

Basics of Commodity Trading Day 3

12. What is hedging?

Hedging means taking a position in the futures or options market that is opposite to a position in the physical market. It reduces or limits risks associated with unpredictable changes in price. The objective behind this mechanism is to offset a loss in one market with a gain in another.

13. What is arbitrage in commodity markets?

Arbitrage is making purchases and sales simultaneously in two different markets to profit from the price differences prevailing in those markets. The factors driving arbitrage are the real or perceived differences in the equilibrium price as determined by supply and demand at various locations.

14. What are warehouse receipts?

It is a document issued by a warehouse indicating ownership of a stored commodity and specifying details in respect of some particulars, like, quality, quantity and, some times, indicating the crop season. The original depositor or the holder in due course can claim the commodities from the warehouse by producing the warehouse receipt.

15. Is an ISIN number also allotted to commodity like in equities?


Yes, the identifier is called as ICIN. Depending on the type of commodity, grade, validity, expiry date, name & location of warehouse, the exchanges allot ICIN to each commodity. ICIN differs from exchange to exchange.

16. Unlike equities where rate is per share basis, does the commodities market have different rate units for different commodities?


Commodities have predefined lot sizes (set by the respective exchanges as per existing regulation) where current price of a particular commodity, for selected expiry, is shown in contract information available & rate units differ for different commodities. The standard unit based on which the price of the contract is quoted for trading is called quotation or base value. E.g. for gold contract, the quotation or base value is 10 grams while it is 1 kg in case of silver on MCX.

17. What is a lot Size? Do the trading & delivery lot sizes differ from each other?

It is the quantity of a commodity specified in the contract as tradable units. The lot size is different for each commodity. The details about lot sizes / delivery lot can be obtained from the respective exchanges’ website.

Each contract has a lot size and a delivery size, which are not the same; in the case of gold, the lot size on the NCDEX is 100 gm while the delivery size is 1000 gm. If a person wants to enter into a delivery settlement for gold, he will have to enter into a minimum of 10 contracts or multiples thereof. Market participants are required to negotiate only the quantity and price of the contract, as all other parameters are predetermined by the exchange.

Please note the trading/delivery lot varies from exchange to exchange.

18. What are the various elements in cost-of-carry for a commodity?

The cost-of-carry of a commodity is the sum of all the costs including interest, insurance, storage costs, and other miscellaneous costs. Usually, the commodity futures price in the exchange is the spot price plus cost-of-carry.

19. What is the meaning of Basis?

Basis is the difference between the spot price of an asset and the futures price of the same asset underlying. The spot price is the ready price prevailing in the physical commodity market while the futures price is the price of any specific contract that is prevailing in the exchanges where it is traded.

20. What is meant by basis risk?

Generally, the spot price of a commodity and future price of the same underlying commodity do not change by the same amount during the life of the futures contract. This uncertainty in the variation of basis is known as basis risk.

Basics of Commodity Trading . Day 2

Main Commodities List. 

Main Commodities List

Mainly Commodities Mainly divided into 3 types

1. ENERGY–oil and oil products, natural gas, electricity, coal, alternative energy

2. PRECIOUS METALS–gold, silver, platinum, palladium, and others

3. BASE METALS–copper, aluminum, nickel, lead, zinc, tin

Basics of Commodity Trading. Day 1

Contract Note Ref 1

1. What is a commodity?

A commodity is a product having commercial value that can be produced, bought, sold, and consumed.

2. What is a Derivative contract & what is Commodity future?

A derivative contract is an enforceable agreement whose value is derived from the value of an underlying asset; the underlying asset can be a commodity, precious metal, currency, bond, stock, or, indices of commodities, stocks etc. Four most common examples of derivative instruments are forwards, futures, options and swaps/spreads.

Commodity future is a contract to buy or sell specific commodity, of a specific quality, at a specific price, for a specific future date on the exchange.

3. What is a forward contract?

A forward contract is a legally enforceable agreement for delivery of goods or the underlying asset on a specific date in future at a price agreed on the date of contract. Under Forward Contracts (Regulation) Act, 1952, all the contracts for delivery of goods, which are settled by payment of money difference or where delivery and payment is made after a period of 11 days, are forward contracts.

4. What is a futures contract?


Futures Contract is a type of forward contract. Futures are exchange traded contracts to sell or buy standardized financial instruments or physical commodities for delivery on a specified future date at an agreed price. Futures contracts are used generally for protecting against rich of adverse price fluctuation i.e. hedging.

5. How are futures prices determined?


Futures prices evolve from the interaction of bids and offers emanating from all over the country which converge in the trading floor or the trading engine. The bid and offer prices are based on the expectations of prices on the maturity date.

6. What is long position?

In simple terms, long position is a net bought position.

7. What is short position?

In simple terms, short position is net sold position.

8. What is the difference between spot market and futures market?

In a spot market, commodities are physically bought or sold usually on a negotiable basis resulting in delivery. While in the futures markets, commodities can be bought or sold irrespective of the physical possession of the underlying commodity. The futures market trades in standardized contractual agreements of the underlying asset with specific quality, quantity, and mode of delivery whose settlement is guaranteed by regulated commodity exchanges.

9. What is a Commodity Exchange?


As in capital markets, a commodity exchange is an association or a company or any other body corporate that is organizing futures trading in commodities and is registered with FMC (Forward Market Commission). Two major national level commodities exchanges are Multi Commodities Exchange of India (MCX), National Commodities and Derivatives Exchange of India (NCDEX).


10. Who regulates the commodity exchanges in India?

Commodity Market in India is regulated by Forward Market Commission (FMC) under the guidance of the Ministry of Consumer Affairs, Food, & Public Distribution.

11. What are the benefits of futures trading in commodities?


The biggest advantage of trading in commodity futures is price risk management and price discovery. Farmers can protect themselves against undesirable price movements and decide upon cropping pattern. The merchandisers avoid price risk. Processors keep control on raw material cost and decreasing inventory values. International traders also can lock in their prices

Live Trading Call on Crude Oil On 11.07.13

AS ON 10.07.13  MORNING SESSION PROFIT BOOKING ....WE GO FOR LONG @ 6300 ABOVE.

BOUGHT 4 LOTS @ 6300
SOLD 4 LOTS@ 6404
NET PROFIT = 4 X 104 = 416 X 100 = 41,600
LESS BROKERAGE = 4X400 = 1600
So Net PROFIT = Rs 40,000


AS ON DATE NET PROFIT ON HAND - 1,71,600 + 20,000 + 22,800 = Rs 2,14 800

After  Pay Out Rs 2, Lakh ..Balance Rs 14,800/-

Rs - 40,000 +30,400 +14 800 = Rs 85,200/-

Natutal Gas Introduction

Introduction

Natural gas is a vital component of the world's supply of energy. It is one of the cleanest, safest, and most useful of all energy sources. Natural gas is a combustible mixture of hydrocarbon gases. While natural gas is formed primarily of methane, it can also include ethane, propane, butane and pentane. Natural gas is likely to play a greater role in the world energy mix given its growing resource base and its relatively low carbon emissions compared to other fossil fuels. Natural gas, when compressed at a pressure of 250 bars, is termed as compressed natural gas (CNG).

Global Scenario

The world’s natural gas reserves are estimated to be 7,360.9 trillion cubic feet (tcf). The Middle East holds 38.4% of the world’s reserves, while an additional 21.4% is located in the former Soviet Union, with only 9% held in the OECD countries. In 2011, the global natural gas production was 3,276.2 billion cubic metre (bcm), up 3.1% from 3,178.2 bcm in 2010, and consumption was 3,222.9 bcm, compared with 3,153.1 bcm in the previous year. The US, Russia and Canada are the largest natural gas producing countries, while the US, Russia and Iran are the largest natural gas consuming countries in the world.

Indian Scenario

The balance recoverable natural gas reserves in the country is 1240.9 bcm, which accounts for only 0.6% of the world’s total natural gas reserves. The share of natural gas in the country's primary energy mix decreased to 9.8% in 2011 from11% in 2010. However, this share is quite low compared to the global average (24%), primarily due to the supply-side constraints. The natural gas (including CBM) production in 2011 was 46.1 bcm, which is 12.8% higher than the actual production of 50.8 bcm in 2010. India's consumption of natural gas was around 61.1 bcm in 2011, which accounts for only 1.9% of the world natural gas market. As India does not have any pipeline connection, all the gas currently imported is LNG. India's current operational LNG import capacity is 18 bcm.

Price Moving Factors

Natural Gas inventory data The US weather conditions and active hurricane season poses a threat to the US Gulf coast’s natural gas production Price of crude oil Industrial and Residential demand in the US

Natural Gas Lot Size Specifications

Lot Size = 1250/mmbtu

Tick size = 10 paise

Margin Amount = Rs 25,000 +

If 10 Paise goes up = Rs 125

If 20 Paise goes up = Rs 250

If 30 Paise goes up = Rs 375

If 40 Paise goes up = Rs 500

.

.

.

.

If 1 Rupee  goes up = Rs 1250

Sold 4 Lots @ 226.00
Bought 4Lots @ 218.00

Net Profit = 8 Rs/ Lot..So 4 Lots 4 X 8 = 32

Lot Size 1Rs = Rs 1250

8 Rs = 8X 1250 =  Rs 10,000

For 32 Rs =  32 X 1250 =  Rs 40,000

Deduct Brokerage..Rs = 1,000

So Net Profit = Rs 39,000/-

Brokerage ‘ll deduct…  Rs 250/ Lot

We can cover the brokerage if 0.20 Paise ‘ll goes up..

So for 4 Lots = 4 X 250 = Rs 1,000 

.

Live Commodity Trading Call on Crude Oil (Energy) on 10.07.13

AS ON 09.07.13  MORNING SESSION PROFIT BOOKING ....WE GO FOR LONG @ 6220 ABOVE.

BOUGHT 4 LOTS @ 6220
SOLD 4 LOTS@ 6300
NET PROFIT = 4 X 80 = 32 X 100 = 32,000
LESS BROKERAGE = 4X400 = 1600
So Net PROFIT = Rs 30,400


AS ON DATE NET PROFIT ON HAND - 1,71,600 + 20,000 + 22,800 = Rs 2,14 800

After  Pay Out Rs 2, Lakh ..Balance Rs 14,800/-

Rs - 30,400 +14 800 = Rs 45,200/-

Live Commodity Trade on Natural Gas (Energy) on 10.07.13

As on 09.07.13 ..Per Lot 8 Rs taken Profit by Short Covering..Today Again we go for a long..

Live Trade On Natural Gas on 09.07.13

Sold 4 Lots @ 226.00
Bought 4Lots @ 218.00

Live Trading Call on Lead (Base Metal) on 09.07.13

Lead Sold 4 Lots@ 124.50
Bought 4 Lots@ 122.50

Natural Gas Trading

Investment - Rs 64,000  

Net Profit - Rs 14,684/-

Detailed Contract Note..& Live Trading Screen

This trading was executed on most volatile Commdity (Natural Gas)

Introduction of Crude Oil

Introduction

Crude oil is a complex mixture of various hydrocarbons found in the upper layers of the earth's crust. Crude oil is often attributed as the “Mother of all Commodities” because of its importance in the manufacturing of a wide variety of materials. Crude oil accounts for 35% of the world's primary energy consumption. Crude oil is used to produce fuel for cars, trucks, airplanes, boats and trains. It is also used for a wide variety of other products including asphalt for roads, lubricants for all kinds of machines; plastics for toys, bottles, food wraps, among others. Global Scenario Global proven oil reserves in 2011 was around 1652.6 thousand million barrels, of which the OPEC had 1196.3 thousand million barrels. Crude oil accounts for 33% of the world's primary energy consumption. Global oil demand was 88.3 million barrels per day (mmb/d) in 2011, an increase of around 0.7% from the previous year. In 2010, Russia, Saudi Arabia, the US and Iran were the top oil producing countries. Although the US is the world's third largest oil producing nation, it is the world's largest consumer and importer of oil followed by China, Japan and India. Indian Scenario Oil accounts for 29% of India's total energy consumption and there seems to be no possibility of scaling down the dependence on these fuels. Crude oil production during the period April-March 2012 (provisional) was 38.19 million metric tonne (MMT), as compared with 37.71 MMT during the corresponding period last year. The total oil consumption in 2010 was around 3.34 mmb/d. India is the fourth largest consumer of oil and imports more than 70% of its crude oil requirement. India's refining capacity stood at 193.39 MMTPA on January 1, 2012 of which 116.89 MMT is in the public sector, 6.00 MMT in joint ventures, and the balance 70.50 MMTPA in the private sector. The Government of India realised the need to explore more areas and has implemented New Exploration Licensing Policy (NELP), according to which 100% FDI is permitted for small and medium sized oil fields through competitive bidding. Price Moving Factors OPEC output, supply and spare capacities Increased demand from emerging and developing countries; geopolitics US crude and products inventories data Currency fluctuations Weather conditions Speculative buying and selling Changes in the refining sector, for example, a drop in the refinery utilisation rate

Crude Oil Trading on 09.07.13

AS ON 08.07.13  MORNING SESSION PROFIT BOOKING ....WE GO FOR SHORT @ 6245 ABOVE.

SOLD 4 LOTS@ 6245
BOUGHT 4 LOTS @ 6184
NET PROFIT = 4 X 61 = 244 X 100 = 24,400
LESS BROKERAGE = 4X400 = 1600
So Net PROFIT = Rs 22,800


AS ON DATE NET PROFIT ON HAND - 1,71,600 + 20,000 + 22,800 = Rs 2,14 800/

So 1 lakh Investment 'll give Rs 2, 14,800 by using proper technical  Knowledge..But always never expect All trades are to be win..I Assure the 50 / 50 Chances .

Now Better Pay Out Again Rs 2, Lakh to Enjoy the Profit..

Crude Oil Trade Live on 08.07.13

AS PER TODAY MORNING SESSION PROFIT BOOKING ....WE GO FOR SHORT @ 6300 OR ABOVE.
SOLD 4 LOTS@ 6300
BOUGHT 4 LOTS @ 6245
NET PROFIT = 4 X 55 = 220 X 100 = 22,000
LESS BROKERAGE = 4X400 = 1600

So Net PROFIT = Rs 20,400


AS ON DATE NET PROFIT ON HAND - 1,71,600 + 20,000 = Rs 1,92,00

Commodity Trading Crude Oil Live Trade

Further Plan We go for Short..from @ 6,375 OR Above..

As On 06.07.13

SOLD 4 LOTS @ 6375
NOW BOOK THE PROFIT  BOUGHT 4 LOTS @ 6300

NET PROFIT = 4 X 75 = 30 X100 = 30,000
LESS BROKERAGE = 4 X400 = 1600

SO NET PROFIT ADD ON 08.07.13 Rs 28.400



AGAIN WE GO FOR SHORT @ 6300 OR ABOVE..

AS ON DATE NET PROFIT ON HAND - 1,71,600

SO NET PROFIT ADD ON 08.07.13 Rs 28.400
TOTAL NET PROFIT ON 06.07.13 - Rs 38,000
TOTAL NET PROFIT ON 05.07.13 - Rs 69,600
TOTAL NET PROFIT ON 04.07.13 - Rs 35,600