Stock Market Vs. Commodity Market-Know The Difference

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Cryptocurrency Horizen

When an investor sets out to do online trading, the primary vision is to choose an asset for investment purposes carefully. The target of the pool of assets available for investment is to hit the bullseye by investing capital in an income-generating asset. visit here An investor has a variety of stocks to choose from, such as crude oil, gold, and agricultural produce. The commodity markets have their eyes on hedging practices against the price fluctuations happening in the market. On the other hand, the stock markets have their prime focus on capital appreciation of their investments on Commodity Market or stock market.

Understanding the Stock Market

  • A stock market is a place where the buyers and sellers of stock meet for the objective of online stock trading. Whenever an investor invests money in any stock, gold gets entitled a part ownership in the said company to the extent of their holding in the entity.
  • Subsequent to the investment, the stockholder is entitled to voting rights in the entity. The other benefits, which the stockholders enjoy, are capital appreciation and dividend earnings.
  • In online trading, there is no arrangement for the buying or selling of stocks to happen directly between the stockholder and the company. The investor has to go via the stock exchange route to make a trade.
  • Since the price fluctuations depend on several external and internal factors, resulting in them being volatile, the investor needs to carefully assess and analyze that market before initiating a trade. Visit Here

Below are the leading stock exchanges in India where buying and selling of securities take place:

  • National Stock Exchange
  • Bombay Stock Exchange

The first step is to open Demat account online  with the registered stockbroker.

Understanding the Commodity Market: 

  • Commodities such as silver, coffee, rubber, etc., are bought and sold in the commodity market. Trading happens in both setups-virtual as well as a common physical marketplace.
  • A futures contract is one of the most preferred and convenient methods to make a trade in the commodities market. In such a scenario, the contract is entered into by the parties at a predetermined date, time and price.
  • It is an obligation that is to be fulfilled by the parties. The manufacturers and the farmers utilize the futures contracts to hedge against the potential losses.

Below are some of the commodity exchanges in India:

  • Indian Commodity Exchange
  • Multi Commodity Exchange

Differences between the stock market and the commodities market

Price: The stock market prices are dependent on the functioning of the company, government policies, and the economy. Prices in the commodities market are dependent on the demand and supply of that particular commodity.

Risk: The risk in the commodity market is very high. As compared to the commodity market, the stock market is less risky.

Trading: The stock market trading can be intraday trading as well as a long-term investment. On the other hand, the trading in commodities markets for options and futures expires each month.

Trading hours: For the stock market, the timings are from 9.15 am to 3.30 pm every day. For the commodities, market timings for agricultural products are 10 am to 5 pm and 9 am to 11.30 pm for energy and metals.

Lot size: Commodity markets are traded in lots. In the stock market, trading does not happen in lot sizes.

Conclusion

For success in online trading, the first and foremost mantra is to follow your own path. Confidence only comes once you have done your thorough research and analysis. Hence, the key is to study the market well and then proceed.

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