You must have heard about the commodities market in India. It is amongst the major financial markets in India and provides the investors with opportunities to trade in commodities including metals, energy and agriculture commodities.
When you plan any investment, diversification is very important to safeguard your portfolio from market risks. Commodity markets provide the perfect platform for diversification from your equity investments. These markets work on the principal of demand and supply. Commodities are an asset class which offers you the benefits of economic cycles.
Commodities market work in a very similar manner like the equities market, though there are some differences between the two. Commodities are also regulated by the Securities and Exchange Board of India (SEBI). Similar to equity, you need a Demat account and a trading account to start trading or investing in them. The largest stock exchanges for trading in commodities in India are the Multi Commodity Exchange (MCX) and National Commodity Exchange of India (NCDEX).
Trading in commodities require you to have an understanding about the concept of demand and supply on which these markets work. In case, you are new to the world of commodities a commodity trading advisor can help you sail through the world of commodities.
Let us understand why it is recommended to have a Commodity Trading Advisor when you plan to invest in the commodities.
So, without further ado, let us discuss about short-term investments and find out why you should choose them.
1. Registered with SEBI
SEBI has made it mandatory for every commodity advisor to be registered with them. In case if an advisor is providing advice without a valid SEBI registration, the same is to be considered to be illegal in India. In case, you are not satisfied with your advisor, you can always approach SEBI’s grievance redressal portal, which is known as SCORES (SEBI’s complaint and redressal system).
Since all the commodity advisors are being regulated by SEBI, you can be assured that there are minimal chances of any fraudulent practices, which could take place during the investment journey.
2. Research Based Recommendations
Commodity Trading Advisors have a team of researchers, who conduct hours of research on market trends and also keep a track of global happenings which can affect the markets. Based on all the research, they are able to analyze market trends and generate recommendations for investors based on the same. There are various aspects, which are analyzed before generating any trade or investment recommendation.
Since the recommendations are generated by experienced researchers after lot of analysis, there are high chances that the same can work out the way they are expected.
3. Certified Researchers
As per the SEBI act, any individual can be certified as a researcher only after they have successfully completed some certifications. These certifications include NISM investment advisor certification and also include the Chartered Market Technical (CMT) certificate.
All the commodity advisor who are registered with SEBI will never appoint anyone as a researcher or advisor until and unless they hold a valid certification.
4. Risk Profile Analysis
No two individuals have the same financial, then how can the recommendations be the same for both of them? For instance, someone has a capital of Rs. 1 lakh for investment on the other hand someone has accumulated an enormous capital of INR 50 lakhs. For obvious reasons, the financial capacity of both of these persons is entirely different.
Therefore, SEBI has made it mandatory to conduct a risk profile analysis before onboarding any new customer and cater them services only as per their risk beating capacity. So, with a commodity trading advisor, you can be assured that you will never loose in the market beyond your capacity.
5. Ease of Trading
The most tedious job when trading or investing in the markets is to choose the investment asset and also the levels at which you should enter or exit. Any discrepancy in the same can led to huge loss and can even wipe out your entire capital in a fraction of seconds.
When you trade in commodities with a commodity advisor, this complete process of researching is done by your advisor. Therefore, the only job you have is to simply place trade orders with your broker according to your advisor’s recommendations. What can be easier?
Conclusion
The financial markets are full of risks and commodities market is no different. Therefore, it is recommended to trade or invest in the markets with the help of qualified research. HNI Commodity Mega is one such service, where you can get recommendations for trading in commodities from a dedicated research analyst.
