The Multi Commodity Exchange or MCX 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. 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 guide 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.
- 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.
- 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.
- 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.5,000, with this amount depending on the value of a commodity.
- 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.
The following documents are required to open a MCX account.
- PAN details
- Address proof (Voter ID, DL, Passport, etc.)
- Passport size photographs
- Bank account details
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
- Transactions executed through brokers attract brokerage which is typically 0.1 to 0.25% of the transaction value
- Markets are functional from 10 am to 11:30 pm and trade can be carried out during these hours only
- An internet connection is required to participate in trade
- Gold can be traded in different bullion forms, with Gold Guinea, Gold petal and Gold M being some of the forms
- Trading in MCX involves a certain element of risk and one should be aware of repercussions