How To Buy Gold In The Futures Market In India?

It is not too difficult to buy gold in the gold futures market in India. You first need to open a broking and trading account before anything else. Once you open the broking and trading account, you can buy gold in the same way as you buy shares and stocks. For this you have to first place an order.

There are many advantages of buying gold in the futures market in India. The first and the foremost is that it is easily liquid. You can sell and the amount is credited to your account in trading day plus 2 days. The second there is price transparency and you do not have to worry whether you got the right price or not.

Lastly, you can buy in large quantities with lesser amount, in place of the amounts you would have got for buying physical gold. This is because buying gold in the futures market largely works on the basis of margins. Normally, you would end-up paying a margin of 5 to 10 per cent. So, in the futures market if you buy gold worth Rs 2 lakhs, you would end-up paying only Rs 15,000 as margin. check that before you buy gold in Chennai.

Buying gold in the Indian market through futures is a little risky then buying physical gold. One of the big risks of course is that the exposure is too high. The other problem is that you have to compulsory square off your position in the market, which is another disadvantage.

For example, if you take a contract that expires in March you have to settle that contract by March and there is no other way. So, if you are not sure, which way the contract would move, you are fishing in troubled waters and it is best to stay away. However, if you can rightly predict movement, you are in for good times. Seek professional help, if you are not a professional trader. However, unlike stocks gold is less volatile and hence you may not lose a great deal.

The lot sizes of the gold are much larger then you would buy in the physical market, and so the exposure is less. Remember, when you buy into the futures market, you are more like a trader and not like an investor. You have to square-off your position. To that extent you need to be careful of the choices that you make. You can for sure get more quantity with lesser value which is a good deal in itself. It is extremely important to understand the other nitty gritties of buying gold, before you even attempt trying to buy gold in the futures market, which has many risks associated with the buying.

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