How To Start Trading Gold Through MCX In 2020 [Step By Step Guide]

Trading Gold Through MCX

About MCX

The Multi Commodity Exchange or MCX India as it is commonly known is the largest commodity exchange market in India and the sixth largest in the world. Based in Mumbai, it has been known to change the fortunes of those participating in trade through it.

How To Start Trading Gold
How To Start Trading Gold [Step By Step Guide]

MCX Gold is the most traded commodity on this market, with different bullion options to choose from, and with commodities accounting for 58% of the nation’s GDP, MCX can be an excellent money making option for millions.

Beginners Full Instructions to Trading Gold Through MCX

The world of trading can seem daunting to the uninitiated, and failure to understand it can lead to your downfall.

First time investors need to follow a few simple steps to enjoy the features and benefits of this market.

  1. Find and select a broker – Brokering firms are the best way to enter the MCX and one should choose a firm which matches his/her ideals and aspirations. One should ensure that the broker is registered on the MCX.
  2. Register – An individual should register himself in order to trade in gold and is required to fill in an application form. This application should be filled with the relevant details and a copy of requisite documents should be provided. Registration is complete on submitting this form.
  3. Know the minimum amount – Every commodity has a minimum investment amount and an individual should ensure he/she meets this minimum requirement while investing. The minimum amount for gold is around Rs.50,000, with this amount depending on the value of a commodity.
  4. Money transfer – One cannot trade until money is transferred to the broker. This amount can be transferred by DD, cheques or net banking. Once this is done, an individual can log on to his/her account and participate in trade.

All Documents Required

The following documents are required to open a MCX account.

Things to Remember

Individuals should keep the following points in mind while participating in gold trade through the MCX.

  • Most brokers charge a small registration fee
  • An internet connection is required to participate in trade
  • Transactions executed through brokers attract brokerage which is typically 0.1 to 0.25% of the transaction value
  • Markets are functional from 9 am to 11:30 pm and trade can be carried out during these hours only
  • Trading in MCX involves a certain element of risk and one should be aware of repercussions
  • Gold can be traded in different bullion forms, with Gold Guinea, Gold petal and Gold M being some of the forms

Overview

Gold, the most sought-after of all precious metals, is acquired throughout the world for its beauty, liquidity, investment qualities, and industrial properties. As an investment vehicle, gold is typically viewed as a financial asset that maintains its value and purchasing power during inflationary periods.

Gold has a long and fascinating usage history in a diverse range of industries and applications. In each of the applications it is used, gold provides an outstanding performance due to its unique properties of being one of the most malleable and ductile metals with high melting point and easy recyclability.

Gold is a material of choice in medicine and dentistry as it is biocompatible. In recent years it has emerged as a key nanomaterial. Global demand for gold is centered on four primary categories: jewellery, investment, central bank reserves, and technology.

Risk management is of critical importance for gold value chain participants, such as mining companies, processors, companies dealing in gold and gold products, jewellers, and even governments which rely on the proceeds of bullion consumption and trade.

Modern hedging techniques and strategies, including market-based risk management financial instruments, such as gold futures, can improve efficiencies and consolidate competitiveness.