With the rising number of people investing in the stock market, a lot of commodity trading exchanges and stockbrokers have opened up over a period of time. This brings us to an important question – Which broker to choose? Every broker that offers commodity trading has its own perks. One of the most important factors to consider is the commodity margin.
In this article, we will discuss the commodity margin, its significance and also bring to you the 5 stockbrokers that offer the highest commodity margin.
But first, the basics!
Commodity Margin Basics
In simplest of words, margin trading means borrowing money from the broker in order to make a trade. It is an important and influential aspect of commodity trading.
Due to margin, you do not have to pay the actual price of any commodity you are buying. You pay a percentage of the price and the rest is borrowed from the broker. In a way, margin can be seen as a loan from the broker for a short duration.
Margin offers you huge leverage while trading commodities and you can buy a lot more commodities than you would be able to buy without it.
Let’s try to understand the Commodity Margin with the help of an example.
Suppose that a commodity has the price of ₹1000. If there were no margin and you had ₹1000 to invest, you would be able to buy one lot of this commodity.
Now suppose that the broker offers you a margin of 20%. This means that you can borrow 80% of the money from the broker. Now, the price you have to pay for the commodity becomes ₹200. Therefore, you can buy five lots of the commodity for ₹1000.
There are basically two types of Commodity Margin:
Before you begin trading in commodities, you would have to deposit a sum in your account with the broker. This sum would depend on the type of commodity you want to invest in as well as the exchange. This is called the initial margin.
Generally, the amount of initial margin required is 5-10% of the contract value.
For example, suppose that you are opening a commodity trading contract worth ₹1,00,000. The broker requires an initial margin of 5%. In that case, you would have to submit ₹5,000 to the broker initially as a deposit.
The initial margin is required as a security in case a loss occurs in your commodity. Money from the initial margin is used to keep up your share in the commodity.
When you are trading in commodities or any segment for that matter, you are bound to have losses in some of your trades. At times, the losses can lower the balance in your account. When the losses pile up and the account balance falls below a particular point, the broker would ask you to top up your balance.
This point is called the maintenance margin.
For more information, check this detailed review on Margin Money.
5 Stockbrokers with Highest Commodity Margin
Now that we know what is commodity margin, let us discuss top 5 commodity trading brokers who offer the best margin:
In the market since 1987, Angel Broking is one of the topmost commodity brokers in India. Besides commodities, the platform also functions in equity, currency trading, mutual funds, bonds, etc. The platform also offers researched information to traders so that they can make informed decisions. It also provides live news of various happenings in the market.
Further, traders can also make use of charts and comprehensive research reports to widen their knowledge. The platform also offers models and calculators as well.
When it comes to Commodity margin, the broker goes up to 10 times of your trading account balance. Here is Angel Broking Margin Calculator for your reference.
The brokerage offers you flat fee broker charges of ₹15 per trade for orders less than ₹50,000 and ₹30 per trade for orders above ₹50,000. For more information, check this Angel Broking Brokerage Calculator.
Angel broking can also provide you with predictive investment recommendations by using artificial intelligence. These are recommendations about where to invest based on algorithmic calculations. For more information, check out Angel Broking ARQ.
If you want to choose a broker based on commodity margin, Angel Broking might be a great way to go!
Motilal Oswal is another big name in the stock market space. It is a commodity trading broker that was incorporated in 1987. Besides commodity trading, the firm also offers services in other segments like Stocks, currencies, etc.
Other additional products like mutual funds, IPOs, securities, etc. are offered as well. It offers account creation as well as other added services for free. It provides all traders with free analysis terminal which can be used for the creation of a well proof strategy.
Their commodity trading options will invest you to trade across bullions, energy, agro, and other commodities. The exchange they trade in is MCX and NCDEX.
As far as the Commodity Margin is concerned, the broker goes as high as 15 times of your trading account balance.
They also offer a real-time fund transfer facility. Based on the type of trader, their offerings can be customized. These types include Investor, Trader, hedger, Speculator, or arbitrageur. Their account opening charges are zero.
However, they charge an annual maintenance fee of ₹299. The brokerage fee for commodity futures is 0.03% or ₹30. Check out Motilal Oswal Brokerage Calculator for more information.
Motilal Oswal places a strong focus on research on top commodities to invest in. Almost 10% of the revenue earned through equities is spent on research. It has a customer database of more than a million customers. It also offers daily, weekly, monthly, quarterly, and yearly research reports across various segments.
Further, it offers high-end technology solutions to its client. Clients can trade through computer, web, mobile, as well as smartwatches.
Zerodha is a discount broking firm based in Bangalore. It is relatively new as compared to its competitors as the company started its operations in 2010. Zerodha is a discount broker that offers its services in commodity trading, stocks, and currency derivatives.
Zerodha offers flat fee brokerage to its customers, which is why it is called a discount broker. It charges a brokerage fee of ₹20, no matter the size and segment. Here is the Zerodha Brokerage calculator for some quick calculations.
Zerodha is a discount broker in India based on the volume of transactions, customer count, and growth. More than one-tenth of the trade over MCX, NSE, and BSE is done through Zerodha.
Zerodha has taken many informative measures to educate its customers in the field of equities. These measures include Zerodha platforms such as Varsity and Trading Q&A.
Zerodha varsity offers 10 modules which enable trades to introduce themselves to the aspects of trading and investment. Traders can learn how to analyse various trends and charts. They are made aware of technical and fundamental analysis related to securities.
Trading Q&A is an open platform where traders ask questions pertaining to Zerodha. These questions are answered by representatives appointed by Zerodha as well as other community members.
Kite 3.0 is a web-based trading platform that can be used to trade on any device that is capable of connecting to the internet and can browse the web. This platform offers an in-depth analysis of the market with various charting features.
There are over six types of charts and 100 charting technical indicators. It also offers millisecond order placements.
Zerodha also offers its traders access to various partner applications that are developed by other companies. These applications include Stock Reports, SensiBull, Zerodha Streak and Smallcase.
5Paisa is a discount trading broker based in Mumbai. It is the second biggest discount broker in India after Zerodha. 5paisa is a subsidiary of India Infoline, which is a major diversified financial company in India.
India Infoline kickstarted its operations in 1995. The company opened the trading platform 5paisa in 2016. While IIFL is a traditional broker, 5Paisa acts as its online trading face.
Besides commodity trading, 5Paisa functions in stocks, commodities, currencies, bonds, insurance, personal loans, and much more.
It provides commodity traders with a Commodity Margin of up to 15 times. Check out this 5Paisa Margin Calculator for reference.
The various trading platforms offered by 5Paisa are mobile trading, desktop trading, and browser trading.
The desktop trading includes 5paisa application running on your desktop. This terminal offers high-end software solutions to most experienced traders. Features offered are analysis and charts for intraday and historic trades.
The web platform offers to trade through any device that has a web browser. The mobile platform allows customers to trade via a smartphone application.
5Paisa charges a flat fee of ₹10 per every order that is executed. The account opening charges are ₹400. Here is the 5Paisa Brokerage Calculator for you to understand its different charges.
Sharekhan is a major broker in India which offers a good commodity margin to its traders. While it is one of the most famous stockbroking firms, it is also a commodity trading broker as well. While it was incorporated in 2000, it has seen tremendous growth since then. Besides India, it also operates in UAE and Oman.
Sharekhan currently services around 18 Lakh customers. Besides commodity trading, it also offers brokerage in stocks, equity cash, mutual funds, IPOs, and derivatives.
Apart from that, Sharekhan offers an in-depth analysis of the market as well as various research features. Traders can make informed decisions with the help of efficient charts.
Sharekhan offers a high-speed trading terminal called the Sharekhan TradeTiger. TradeTiger helps in making quick trades for the commodity traders.
Sharekhan publishes regular reports which are compiled by its own research teams. It also hosts a knowledge centre on its website to enable commodity traders to make smart decisions. Online seminars and classroom workshops are also given to investors so that they can educate themselves in commodity trading.
The commodity trading brokerage charges are 0.10% per order. There are no account opening charges, but an annual maintenance fee of ₹400 is charged. Here is the Sharekhan Brokerage Calculator for your information.
While there are several commodity brokers in India, the list we have compiled mentions the brokers which offer the best commodity margin. In order to know more about commodity trading brokers, you can shoot us a query and we will be happy to answer it.
In case you are looking to trade in the commodity segment or stock market investments in general, let us assist you in taking the next steps forward.
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