How to Trade Futures in India
Futures contracts, widely known as futures, are standardized contracts that specify a certain amount of a given commodity (e.g., gold, wheat) of certain quality that should be delivered for a specified price at a specific date in the future. There are a wide range of commodities that are traded in India, generally on the National Commodity & Derivatives Exchange Limited (NCDEX), an electronic trading platform. Futures trading is regulated in India by the Forward Market Commission.
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Instructions
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Learn as much as you can about futures trading in general and Indian futures trading in particular. Read books on the subjects, preferably written by star futures traders or investors. For more up-to-date information about the futures market, refer to business news agencies like Reuters or Bloomberg.
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Open a demo trading account with an on line broker that allows customers to trade Indian futures. A demo account is just like the real account, but the money is not real. Most on line brokers allow anyone to open a demo account to test their trading platforms. Go for a broker that offers competitive rates and has a good reputation. Check the broker's "legitimacy" with the Forward Market Commission, the Indian regulator.
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Open a live account, deposit funds and start trading. Opening a live account is easy and can be done on line. You can deposit funds to your trading account via a wire bank transfer, which takes one to four days to complete. Do not deposit large amounts, but try your luck first with small deposits.
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Watch Indian weather. Monsoon rains are particularly important, as they are the primary source of irrigation for many Indian agricultural commodities. When there is little rain, prices for commodities that consume a lot of water, like cotton or potatoes, go up, reflecting the fear that this year's crop may disappoint, decreasing the supply of the produce.
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Watch Indian government. It is not infrequent that the government interferes in the food market to protect poor farmers or consumers. If you think that the government may interfere in the market for a particular commodity future (maybe because the price has diverged with fundamentals), do not trade it.
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References
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