What is a Commodity?

Firstly, it’s important to understand what commodity trading consists of. Commodities are basic commercial goods like oil, corn, gas, water, and even gold (though it has a separate market of its own). In other words, commodity goods are those (physical) agricultural or non-agricultural goods that are largely essential to any economy.

And because these resources are precious and getting scarcer with time, they can be traded with a future contract. This is an agreement to buy or sell some/all of the goods at a promised price on a future date. And that’s what commodity trading is all about!

What are the Benefits of Commodity Trading?

If you are looking to diversify your portfolio as a trader, investing in commodities might be the right choice for you because they are an individual asset class. While the huge liquidity of commodities does pose a high chance of risk, making reliable and informed investments in the commodity market can earn you significant profits, too!

Commodity trading is also perfect for those who are planning to add long-term assets to their investment portfolio. This is because commodities are considered to be secure investments to balance against inflation in the near future.

What is a Commodity Trading Account?

Now, as you may have rightly guessed, commodity trading accounts are accounts that allow traders to exchange these commodities directly. And with most trade operations being conducted online now, you can not only trade in commodities online but also complete the commodity trading account opening process online.

So, if you’re ready to start investing in commodities, here’s how you can open your own commodity trading account online!

How to Open a Commodity Trading Account Online?

Before we get into the details of opening a commodity account virtually, it should be noted that a commodity trading account is always linked to your Demat account. This way, the trading activities of buying or selling the commodity orders can be simplified, because such trades can be executed only with Demat accounts.

Now, without further ado, here are the 5 simple and sahi steps you must follow to open your commodity trading account online and start yielding steady returns!

Step 01 – Study and Select a Brokerage Firm 

 The first and most critical step to opening a commodity account online is to select the right broking company for you. For this, you must conduct extensive research and shortlist those well-established and reputed brokerage firms that have a consistently robust track record in commodity trading.

Here, you must critically analyze the company’s standing in the market, customer reviews, trading platform features, customer support services, and commission structures. Some firms require you to be of a minimum age – mostly 18 or 21 years old – to open an account, so make sure that you’re eligible to trade with whichever firm you pick.

Also important to keep in mind is the company’s brokerage fees and commissions – make sure their charges are not just reasonable, but even competitive.

For instance, TradeMobi offers a simple, user-friendly trading platform with advanced charting tools, real-time market data, and quick order execution capabilities – all at no/minimal broker fees charged!

Step 02 – Submit Relevant Documents 

 Once you find a firm that aligns best with your trading approach and investment goals, it’s time to begin the application process for your online commodity trading account.

Different firms may have different documentation that they require from you. But most firms typically ask for:

• Proof of Identity: To prove your identity, you can submit a copy of your valid passport, your driver’s license, or your national identification card (like your PAN card or Aadhar Card).
• Proof of Address: Your Aadhar card, passport, or driver’s license can also serve as proof of address for you. Documents such as utility bills, bank statements, or even government-issued letters can also be submitted for the same. The underlying condition is that the document submitted as proof of address should display your full name and current residential address clearly.
• Tax-related documents: Depending on your jurisdiction and the brokerage company’s requirements, you may need to provide tax-related documents, such as tax identification numbers or forms.

Step 03 – Choose the Type of Commodity Trading Account You Want 

 To cater to the varying commodity trading necessities and preferences of each trader, brokerage firms offer varying kinds of commodity trading accounts. Most commonly, people get to select from individual accounts, joint accounts, managed accounts, and even corporate accounts.

Individual accounts are perfect for you if you wish to have your own separate commodity trading account, whereas you can even pool your resources with fellow trusted traders and trade jointly by opening a joint account together. Meanwhile, a managed account is suitable for you if you wish to delegate your trading decisions to a professional investment manager. Lastly, corporate accounts are designed for businesses or corporate entities to invest in commodities and rake in profits on a larger scale.

So, based on your specific needs, you must select the type of commodity account that aligns best with your trading.

Step 04 – Submit the Online Account Opening Application Form 

This is the step where advanced technology will be of the utmost advantage to you. While researching, vetting, and contacting your preferred brokerage firm can also happen online, it is the easy application process online that will come as a huge convenience to you. Nearly every brokerage firm allows you to submit your account opening application form electronically i.e. online.

All you need to do now is upload the relevant documentation and fill out the requested personal information. This will include your full name, financial and banking information and contact details.

Step 05 – Fund Your Newly Opened Commodity Account and Start Trading! 

 Once your online application form is approved, you will be required to fund your commodity trading account. You can deposit funds into your account via bank transfers, net banking, online payment options (including through UPI), credit cards, and debit cards.

We recommend only transferring a small fund for this first deposit. You can then gradually start increasing the funds in your account after gaining confidence in the trading platform, the brokerage firm, and even your own expertise in commodity trading.

And that’s it! Your online commodity trading account is open and ready for investment at Anand Rathi!

We hope you now have a clear picture of how to open a commodity trading account online. Please reach out to us if you have any related queries!