Commodity Market:-
Commodity market is the market where commodities are bought and sold. For example metals & raw material commodities like cotton, pulses etc.
In commodity market, prices get influenced by many factors from monsoon predictions to political decisions.
Multi Commodity Exchange of India Limited (MCX) and the National Commodity & Derivatives Exchange Limited (NCDEX) are the primary commodity trading platforms in India.
Terminology used in Commodity Market:-
- Futures Contract:-agreement where one party agrees to take a short position and another party assumes the long position on contracted commodity with the specific quantity, quality, price per unit, and the date.
- Settlement:- Close out day of the futures contract.
- Margin:- Margin equal to usually 5-15%.
- Open:-Opening price of the trade.
- Low:- Lowest price in the trading session or day.
- High:- Highest price in the trading session or day.
- Open Interest:-Number of open positions of contracts.
- Short position in a contract:-party who agrees to sell the contracted commodity.
- Long position in a contract:- party who agrees to purchase the contracted commodity.
- Expiry date:- Closure date of the contract.
- LTP:-Last traded price.
- Unit traded:-The unit of measurement