Brief Introduction of the stock market and commodity market What is stock market and commodity market Stock Market
A stock market is a place where the shares of companies are traded publicly. It is like the collection of the market where trading of equities, bonds and shares take place formally or informally. It is one of the most vital markets in India where thousands of transaction has been made every day.
Companies issue their share to raise capital and people who are interested buy a particular share from companies. It is initial public offering to collect capital from the public. There is also NCD IPO - NCD issue means Non-Convertible Debenture public issue. NCD is a Secure and Redeemable Corporate Bond, a bond issued by a corporation called corporate bonds to raise money from the capital market.
Stock can be traded if it is listed in stock exchange. Investor who want high return take stock tips from experts to become a leader in stock trading.
The stock market has it's own identity in the world, BSE and NSE are two largest exchanges. Once the particular security has been sold in a primary market then it is traded in the secondary market where two people buy and sell shares from each other at a specific market price.
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Commodity Market
When I talk about commodity market it is a place where people do the trade of commodities like gold, silver and other precious metals according to the market price. In a commodity market, investors trade in primary economic sectors.
There are two types of commodities first is soft commodities including agriculture products like sugar, wheat and coffee and the other one is hard commodities is natural resources like metals, gold, silver and oil.
Commodity market includes both physical and derivatives trading like futures and options etc. Basically commodity market is a trade market where people do trading of primary product or raw products rather than complete manufactured products.
Who regulates both markets?
Stock market
It is regulated as per the guidelines of Securities and Exchange Board of India (SEBI) established in 1992 and reserve bank of India. It provides the license to deals as well as brokers. Only SEBI license holders have been considered as a legal dealer or brokers.
It also manages and controls every work and performance of stock exchanges.
Commodity market
At first, It is regulated as per the guidelines of Forward market Commission (FMC) established in 1953 and later it merged with SEBI in 2015.Commodities are traded in multi-commodity exchanges (MCX), National – multi-commodity exchanges (NCDEX), Indian Commodity Exchange (ICEX).
Advantages and disadvantages of stock market and commodity market
Stock market
Advantages – You can trade at the low commission, There is no time bound in stock trading you can buy and sell anytime. A number of stocks remain on stock exchanges for many years. It provides investment facilities without limitations with quick and easy returns.
Disadvantages – High risk is one of the major factors in stock trading like if the companies declared bankrupt, then your purchased share may be priceless. You will have to pay extra commission to brokers if you are trading in penny stocks.
If you want to stay safe in the market then you can take trading tips to leading financial advisor they prepare daily stock tips, stock futures tips and commodity tips for their customers.
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Commodity market
Advantages – Commodity trading is trading based on contracts and trading in future contracts is cheaper than buying and selling actual securities. Another benefit is you can recover your position on the same day it depends on you. Commodity does not suffer from cut off because they are not expecting strike price at the time of expiration.
Disadvantages- Trading in commodities is regarded as a risky trading. Most of the trades have lost their money in commodity trading. It needs a high level of expertise to trade in commodities.
In both the markets traders can buy and sell to gain profit. In the stock market they do buy and sell of stock, bond and securities and in commodity market instead of buying and selling stock they buy commodities Computer Technology, but both fields need expert market knowledge and intelligence to trade in the market.