Trading in Commodities:- We have two methods in the market for commodity trading – spot trading and forward trading. Both these trades are legally recognized. Here, it is important to know how it is done. Commodity trading
Spot trading: This is the traditional method of commodity trading. In this, a specific price is paid to the seller through the commodity buyer. The commodity is given to its buyer. You can understand this by connecting it to the buying and selling in the market.
For example, suppose a farmer comes to the market with grain, sells it, and then leaves with the proceeds. This process is called spot trading or cash trading. Because of this, the delivery of goods and payment of money are done quickly.
Futures Trading: Forward trading is defined as trading between two or more people in which the sellers of commodities and the buyers of commodities do it peacefully with each other. The money and delivery date will be paid on the upcoming specific date. But at what price will the commodity be bought?
For example, if two traders named Anil and Sunil are involved, the forward trading contract will be settled at the time of signing. This whole process is called "forward trading."
What exactly is spot trading?
The spot trading method of the commodity is common in India. But this form of trading has many drawbacks. And it’s the biggest drawback. to be the same price.
For example, you can also think a little that someone has to buy one quintal of rice, and with this, farmers go to their own market. There is a moneylender who buys all the grains. And the moneylender can mislead the farmers. For example, the moneylender can tell the farmer that due to the increased production of food grains, he will buy the grains at a cheaper price. Or else the vegetable moneylenders together are not ready to give more than a certain price to the farmer. In such a situation, the farmer is left with no other option. And being forced into this fold, they are ready to accept Mahajan's condition. Apart from this, there are many other problems as well, such as the fact that our spot trading business in India is very scattered and is not fully developed. But it is not applicable in all the states of India.
The Government's Eye: – Trading The government has made elaborate arrangements for future trading and set up a platform for it, and is keeping an eye on any kind of scams or scams in the commodity exchanges, so investors can invest here without any hesitation.