Commodities Trading on INDmoney

Commodity trading means buying or selling contracts linked to raw materials like Gold, Silver, Crude Oil, Natural Gas, Copper, Zinc and Nickel. These commodities are used in real-world industries such as jewellery, fuel, power, construction, electronics and manufacturing. In commodity trading, you usually do not buy the physical commodity. Instead, you trade Futures and Options contracts that move with the price of the commodity.

Stock trading is linked to companies. When you trade a stock, you are taking a view on a company’s business, earnings, valuation and future growth. Commodity trading is linked to raw materials. Commodity prices move because of demand, supply, inflation, currency movement, global events, weather, production cuts and industrial demand. For example, crude oil can react to OPEC updates, while gold can react to inflation or interest rate expectations.

No. You do not need to buy physical gold, silver, crude oil or natural gas to trade commodities online.

Commodity F&O trading happens through contracts. These contracts are linked to the price of the commodity. So, when you trade Gold Futures or Crude Oil Options, you are trading the price movement of that commodity, not taking delivery of gold bars or crude oil barrels.

However, some commodity contracts can have delivery-related rules near expiry. Traders should check contract details before holding positions close to expiry.

MCX stands for Multi-Commodity Exchange of India. It is India’s major commodity exchange where commodity derivatives such as Gold, Silver, Crude Oil, Natural Gas, Copper and Zinc are traded.

A commodity futures contract lets you take a position on the future price of a commodity. For example, if you expect gold prices to rise, you can take a bullish position in Gold Futures. If the price moves in your favour, you make a profit. If it moves against you, you make a loss. In futures, you do not pay the full contract value upfront. A smaller amount is blocked as margin while your position is open.

A commodity options contract gives the buyer the right, but not the obligation, to take a position at a selected price. A call option is generally used when you expect the price to rise. A put option is generally used when you expect the price to fall. 

Commodity futures are margin-based contracts. They give direct exposure to price movement, and both profit and loss can move quickly. Commodity options are premium-based for buyers. Option buyers pay a premium, and their maximum loss is usually limited to the premium paid, plus charges. Option sellers receive a premium, but they need margin and carry a higher risk. In simple terms, futures are more direct, while options give more flexibility to buyers.

Lot size is the minimum quantity of a commodity contract that can be traded. Every commodity contract has a defined lot size. For example, Gold, Gold Mini, Gold Guinea and Gold Petal are different gold contracts with different contract sizes. Smaller contracts can make commodity trading more accessible because the required margin or premium is usually lower than larger contracts.

Margin is the amount blocked as security when you open a commodity futures position. You do not pay the full contract value upfront. Instead, you can start trading at a fraction of the contract value, with margins usually around 5-10%, depending on the commodity, contract size and exchange rules.

On INDmoney, the required margin is shown before you place the trade, so you can check how much  will be blocked for that position. This margin is not a fee. It is released when you close the position, after adjusting profit, loss and charges.

Margin can change because of commodity price movement, volatility, contract expiry, exchange rules and delivery-related requirements. When a commodity becomes more volatile, the exchange can increase margin to manage risk. Margin can also rise near expiry for some contracts. This is why traders should always check the latest margin shown on the order screen before placing or carrying a position.

If you hold a commodity contract till expiry, settlement happens as per exchange rules. Some contracts may have delivery-related requirements. Retail traders should understand the contract specification and square-off rules before holding positions close to expiry.

You can explore commodity F&O contracts such as Gold, Silver, Crude Oil, Natural Gas, Copper, Zinc and Nickel on INDmoney. These commodities belong to different categories. Gold and Silver are precious metals. Crude Oil and Natural Gas are energy commodities. Copper, Zinc and Nickel are base metals used in industries such as manufacturing, construction and electronics.

CTT stands for Commodity Transaction Tax. It is a government tax charged on commodity F&O trades. On INDmoney, CTT is charged on the sell side: 0.01% for commodity futures and 0.05% for commodity options.

Commodity F&O income is generally treated as non-speculative business income. This means your net profit from commodity futures and options is added to your total income and taxed as per your applicable income tax slab.

Yes. Commodity trading is risky because prices can move quickly due to global events, inflation, currency movement, inventory data, weather, production cuts and geopolitical tensions.

Futures trading carries margin risk because losses can move quickly if the price goes against your position. Options buyers can lose the full premium paid. Options sellers carry higher risk and need margin.

Yes, eligible stocks can be pledged on INDmoney and the available margin can be used for commodity trades, subject to applicable rules, haircut and risk checks.

INDmoney currently shows ₹0 margin pledge and unpledge charges on its commodity pricing page. This helps traders use their existing holdings more efficiently without paying separate pledging or unpledging charge