InvestorQ : I just opened my commodity trading account with my broker. Is it safer than equity or more risky?
shrinidhi Rajan made post

I just opened my commodity trading account with my broker. Is it safer than equity or more risky?

Answer
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TSH answered.
1 year ago


There is nothing like what is more risky; it all depends on how you play it. Commodity price tend to be less volatile than equities and derivatives and hence the margins are much lower. That means you get much higher leverage in commodities than in equities or in F&O. This gives you more leverage but also makes the job much riskier since your leveraged positions can hit you both ways. Just as profits can be unlimited, losses can also be unlimited for you. Commodity trading began in India in 2003 in the organized markets when MCX commenced trading in commodities. However, commodities have been in existence for a very long time. In fact, for over hundreds of years they have been around. Commodity trading has a slightly different tinge to it compared to traditional equity trading. The number of factors that impact the price and the trading view on a commodity are a lot more diverse and broad-based.