Zerodha Commodity Trading
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Commodity Trading, as the name suggests, involves buying and selling goods such as fuel, metals, food, etc. This form of trading is prevalent for long and still holds its fair share of importance in this digital stock/share driven market. The Zerodha commodity trading is made available through MCX (Multi Commodity Exchange of India) and is often termed as MCX options trading.
Note that a Zerodha MCX/commodity account is your Zerodha trading account through which you can trade in various commodities. In this article, we shall focus on the various aspects of Zerodha commodity trading. Stay tuned!
Commodity Trading in Zerodha
Commodity trading with Zerodha is available on the firm’s trading platforms. You, however, need to enable commodity trading by logging in to your Zerodha Kite.
This process is crucial and clients can carry out commodity trades in Zerodha through their trading accounts only if this facility is enabled.
You can activate the commodity trading in Zerodha by visiting the MCX website.
Once you have open commodity trading account in Zerodha, you must know the Zerodha commodity trade classification or the list. This particular list determines the types of commodities in which you can trade through the Zerodha platform.
As of now, the firm allows trading in the following commodities:
- Crude oil
Now, here you must understand that only “limit” and “NRML” orders can be placed in the above mentioned MCX options. Zerodha does not allow you to specify the “market” as your order type in this segment.
This means that there’s no provision for market orders on MCX options and no leverage is provided on the same.
Also, you can not have “bracket orders” in Zerodha commodity trading. Only cover order can be placed under the advanced order type segment.
Therefore, you can only add stop-loss to your orders and not a target price. If you wish to exit your order, you will have to do so on the market price or the limit price.
How to Buy Commodities in Zerodha?
A lot of people are not sure if commodity trading can be done on Zerodha Kite or not, Well, the answer is yes!
All Zerodha clients who have enabled MCX in their trading account can use Kite for trading in various commodities offered by the broker.
As already mentioned, having a Zerodha trading account is not enough for commodity trading. You must enable the MCX commodity segment to be able to do so. Those users who have already enabled/activated “commodity” and “equity” at the time of account opening, this step is excluded.
Also, you can use both – Kite web as well as the Zerodha Kite Mobile App to trade in the commodity segment. While adding funds for your commodity trades, make sure to tick on “commodity” as there are two different sections for Zerodha fund transfer (one for equity and other for commodities).
Follow these steps to carry out commodity trades via Zerodha Kite:
- Go to your wishlist and type the name of the commodity you wish to trade.
- Click on a particular option to add it to your wishlist
- Now, to calculate the margin on your trade, click on “Zerodha margin calculator” and select “MCX” under the “exchange” segment
- Then, either select “futures” or “options” under the “product” section
- Now, select the name of your desired commodity under “symbol” and enter the quantity
- Click on “add” you will be able to see all the margin/leverage requirements for that commodity
- If you wish to know the margin requirements for other segments like MIS (intraday), NRML (to hold the position) or simply view the lot size, click on “commodity” on the top side of the “margin calculator” window.
Also, you can learn how to use Zerodha Margin Calculator to avoid any confusion.
- Once you are sure about the Zerodha commodity margin and the lot size of a commodity, you can either buy or sell it.
- As mentioned before, bracket orders in the commodity segment are not allowed in Zerodha
- You can view your order in the order book and modify or exit your order for the order book itself.
Margin amount blocked for the trade can be seen under Funds section where the details are provided as used margin in Zerodha. Here the negative amount signifies profit.
Willing to trade, open your Demat account
Zerodha MCX Expiry Date
When you trade-in commodity derivatives, a contract is made with certain specifications. For a given commodity, it’s contract expires on a particular date.
This simply means that your expiry date is the last trading day for that commodity. If the expiry date happens to be a holiday, your commodity contract shall expire one day before the actual expiry date.
In Zerodha Trading, the MCX expiry dates are regularly updated on the firm’s online Bulletin. To view the same Click Here.
Besides, there are two modes of settlement for MCX –
- Cash Settlement wherein on expiry, the contracts are cash-settled at the exchange declared rate
- Physical Delivery Settlement wherein the commodity equal to the lot size is delivered/given to the buyer. Also, this delivery comes from the warehouse determined by the exchange
At Zerodha, the physical delivery settlement/ physical delivery of commodities is not allowed. Therefore all Zerodha clients must close their open positions before the delivery period starts.
To view the commodity list along with the settlement type and its last date, Click Here.
Zerodha Commodity Trading Login
Your Zerodha commodity trading account is none other than the regular trading account that you use for equity trades. The only condition is that you need to enable MCX options for carrying out such trades.
You can log in to your Kite using your Zerodha Login id and password. Note that the login credentials remain the same for Zerodha commodity trading.
If you are a new Zerodha user logging in for the first time, look for your login id and password in your registered email id. Use them to log in to kite post which you may change the initial password.
Zerodha Commodity Trading Time
The commodity trading time in Zerodha is relatively longer than that of the equity segment. To be more specific, 9:00 am to 11:30 pm is allocated as Zerodha commodity trading hours.
You, get about 13 to 14 hours of trading time in this segment. This is a lot to analyze, monitor, and invest properly. Besides, the time flexibility for Zerodha commodities makes trading possible for those investors who are otherwise not able to trade during the regular market hours.
Check out the detail of commodity trade timings in Zerodha:
|Zerodha Commodity Trading Time|
|Non agri commodities (internationally referenceable)||9 AM-11:30 PM (daylight savings hour)|
|9 AM-11:55 PM (November-March)|
|Agri Commodities (International Referenceable||9 AM-9 PM|
|All the other agri commodities||9 AM-5 PM|
Zerodha Commodity Charges
Commodity trading can be done in the futures and options segment and here is the Zerodha Commodity brokerage details:
|Zerodha Commodity Trading Charges|
|Charges||Commodity Futures||Commodity Options|
|Brokerage||0.03% or ₹20 (whichever is lower) per executed order||0.03% or ₹20 (whichever is lower) per executed order|
|Transaction Charges||Castor Seed - 0.0005%||Exchange in. charge: ₹0|
|Kapas - 0.0005%|
|Pepper - 0.00005%|
|Rbdpmolein - 0.001%|
|STT/CTT||0.01% (Non-Agri) on sell-side||0.05% on sell-side|
To get the detail of taxes and other fees associated with commodity trade, then you can use Zerodha brokerage calculator that tells you about the brokerage along with profit and loss.
Zerodha Commodity Trading Form
In general, you can open a commodity account in Zerodha by either opening an equity account i.e. a Trading + Demat Account or simply enabling commodity if you are an existing Zerodha Account holder.
If existing Zerodha users wish to open their commodity account offline, they need to get the “commodity form” printed, fill it duly, and send it to Zerodha with supporting documents at this address – Zerodha HO [#153/154 4th Cross Dollars Colony, Opp. Clarence Public School, J.P Nagar 4th Phase, Bangalore – 560078]
In the offline method, you need to pay ₹200 as a processing fee. The same for the online method is ₹100.
You will require one of these documents as your proof of income:
- Bank account statement for the last 6 months
- The latest salary slip
- Copy of ITR acknowledgment
- Copy of Form 16 in case of salary income
- Net worth Certificate
- Statement of demat holdings.
If you are still doubtful about commodity trading, then you can opt for available commodity trading courses in India and choose according to your requirement.
Online commodity trading is not as complex as they may seem but you have to do a lot of homework before doing so.
- Firstly you must research well and choose the right commodity broker
- You have to be very particular about the paperwork of your commodity account opening process because it requires disclosing sensitive financial data
- While funding your account for commodity trading, you must determine the amount based on your financial goals and risk tolerance capacity
- Before the actual trading happens, all budding investors should learn the nature of underlying demand and supply of the commodity or derivatives that are being traded.
- A commodity account allows you to reap the benefit of crude oil trading in Zerodha.
- The commodity market is indeed a highly volatile market wherein margin calls may require additional capital. If the value of your investments drops a lot, your broker is likely to initiate a margin call
You can read more about commodity trading on Zerodha Varsity.
We hope this article helped you in understanding the various aspects and requirements of Zerodha commodity trading. So what are you waiting for? Start commodity trading now.
In case you want to know more, feel free to contact us
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