This guide explains how commodity trading works on MCX: the contracts and lot sizes, how prices are set from world prices and the rupee, trading hours, margins, costs and tax, how contracts expire or go to delivery, and how to choose a first contract, with worked examples on gold, silver and crude oil.
Commodity trading at a glance
| Question | Answer |
|---|---|
| Where | MCX for metals and energy; NCDEX for farm products; NSE and BSE also list some commodity contracts |
| Regulator | SEBI, since the Forward Markets Commission merged into it in September 2015 |
| What you trade | Futures, and options that mostly settle into futures |
| Hours on MCX | 9:00 am to 11:30 pm, or 11:55 pm when the US is on winter time |
| Margin | A share of contract value set by the exchange, often 5% to 15% for metals |
| Costs | Brokerage, commodity transaction tax (CTT), exchange and SEBI fees, stamp duty, GST |
| Tax | Non-speculative business income, like F&O |
Key takeaways
- A commodity future fixes a price for a quantity on a future date. Profits and losses are settled in cash every day.
- MCX prices follow world prices converted into rupees, plus import duty for gold and silver.
- The evening session overlaps with US trading hours, when much of the price movement happens.
- Mini and micro contracts let you trade smaller quantities than the standard lots.
- Gold and silver futures can end in physical delivery if held into the tender period; crude oil futures settle in cash.
- Commodity trading income is taxed as non-speculative business income, and CTT is deductible.
How commodity trading works
A commodity futures contract is an agreement to buy or sell a set quantity at a set price on the expiry date. You do not pay the full value. You deposit a margin, and each evening the exchange settles the day's profit or loss in cash against your account, called mark-to-market. Before expiry most traders close the position by taking the opposite trade.
Options on MCX give the right to buy (call) or sell (put) the underlying futures contract. Most MCX options devolve into futures at expiry: an in-the-money option becomes a futures position, which then needs futures margin. Selling an option needs margin, as in equity F&O; buying one costs only the premium.
The exchange's clearing corporation is the counterparty to every trade, so you do not depend on the trader on the other side.
Contracts and lot sizes on MCX
| Commodity | Contract | Lot size | Price quoted per | Move of ₹1 in the price |
|---|---|---|---|---|
| Gold | Gold | 1 kg | 10 g | ₹100 a lot |
| Gold | Gold Mini | 100 g | 10 g | ₹10 a lot |
| Gold | Gold Guinea | 8 g | 8 g | ₹1 a lot |
| Gold | Gold Petal | 1 g | 1 g | ₹1 a lot |
| Silver | Silver | 30 kg | 1 kg | ₹30 a lot |
| Silver | Silver Mini | 5 kg | 1 kg | ₹5 a lot |
| Silver | Silver Micro | 1 kg | 1 kg | ₹1 a lot |
| Crude oil | Crude Oil | 100 barrels | 1 barrel | ₹100 a lot |
| Crude oil | Crude Oil Mini | 10 barrels | 1 barrel | ₹10 a lot |
| Natural gas | Natural Gas | 1,250 mmBtu | 1 mmBtu | ₹1,250 a lot |
| Natural gas | Natural Gas Mini | 250 mmBtu | 1 mmBtu | ₹250 a lot |
| Copper | Copper | 2,500 kg | 1 kg | ₹2,500 a lot |
Zinc, aluminium and lead also trade in 5-tonne lots, with smaller mini contracts. Check MCX's contract specifications before you trade: exchanges revise lot sizes and tick sizes from time to time.
How MCX prices are set
MCX prices follow the world market. For gold and silver, the rupee price is roughly the international price in dollars, converted at the rupee exchange rate, plus import duty and other levies. Crude oil follows the WTI price in New York converted into rupees, and the MCX crude contract settles against the NYMEX WTI settlement.
That makes two prices matter at once. Crude oil at $89 a barrel with the rupee at ₹96.70 is about ₹8,600 a barrel. If WTI rises 1%, MCX crude rises about ₹86. If the rupee weakens 1% with WTI unchanged, MCX crude also rises about ₹86. A trader long MCX crude is long both oil and the dollar.
Gold has a third factor: import duty. A change in duty moves the Indian price against the world price overnight. The gold commodity trading guide shows how the price is built, including the day a duty change moved MCX gold to its daily limit.
How to read an MCX price quote
Each MCX contract is quoted in its own unit: gold per 10 grams, silver per kilogram, crude oil per barrel and natural gas per mmBtu. To get the contract value, convert the quote to the lot: a Gold Mini lot is 100 grams, or ten units of 10 grams, so at ₹1,52,000 it is worth ₹15,20,000. The tick size is the smallest price step; for Gold Mini it is ₹1 per 10 grams, worth ₹10 a lot.
MCX also sets a daily price range for each contract. When the price reaches the limit, the range widens in steps after a cooling-off period. MCX gold hit its 6% limit on 13 May 2026, the day import duty changed. Contract months are listed side by side, and most trading is in the nearest month until a few days before its expiry, when volume moves to the next one.
Trading hours
MCX trades metals and energy in one session from 9:00 am to 11:30 pm when the United States is on summer time (March to early November), and to 11:55 pm when it is on winter time. Most farm contracts close at 5:00 pm. The evening hours matter because US economic data, the US crude inventory report and the US market open fall between 6:00 pm and 9:00 pm in India.
Holidays differ from the stock market's: MCX often trades the evening session on a stock market holiday. The full timetable and the 2026 holiday list are on MCX market timings.
Margin on commodity futures
MCX sets the margin for each contract from its risk model, as SPAN plus extra margins, and raises it when prices become volatile. These are worked examples at the margin rates brokers showed in September 2026 and illustrative prices.
| Contract | Price | Contract value | Margin rate | Margin a lot |
|---|---|---|---|---|
| Gold Mini (100 g) | ₹1,52,000 per 10 g | ₹15,20,000 | 9.5% | ₹1,44,400 |
| Silver Mini (5 kg) | ₹2,30,000 per kg | ₹11,50,000 | 13.5% | ₹1,55,250 |
| Crude Oil Mini (10 barrels) | ₹8,600 per barrel | ₹86,000 | 31.25% | ₹26,875 |
| Crude Oil (100 barrels) | ₹8,600 per barrel | ₹8,60,000 | 31.25% | ₹2,68,750 |
Crude oil's margin was high in September 2026 after a volatile period; in calmer markets it is lower. The figure your broker blocks can change during the day, so check it before you trade. A position whose daily losses take the account below the margin gets a margin call or is closed.
Costs of a commodity trade
| Charge | Non-farm futures | Options |
|---|---|---|
| CTT (commodity transaction tax) | 0.01% of the sell value | 0.05% of the sell premium |
| Exchange transaction charges | A small percentage of turnover, set by MCX | On premium turnover |
| SEBI fee | ₹10 per crore of turnover | Same |
| Stamp duty | 0.002% of the buy value | 0.003% of the buy premium |
| GST | 18% of brokerage, exchange charges and the SEBI fee | Same |
| Brokerage | Usually ₹20 per order at discount brokers | Same |
Most farm commodities carry no CTT. At ₹20 per order, a round trip in Crude Oil Mini costs about ₹62 in all, and in the standard crude contract about ₹195, as worked out in the crude oil trading India guide. On a Crude Oil Mini lot, ₹62 is a move of ₹6.20 a barrel.
Expiry, settlement and delivery
Each MCX contract has its own expiry: crude oil and natural gas near the middle to the end of the month before the US contract month, gold and silver on set days of their contract months. Settlement depends on the contract:
- Cash settlement. Crude oil and natural gas futures settle in cash at the final settlement price. Nobody delivers oil.
- Physical delivery. Gold and silver futures are compulsory delivery contracts. If you hold a position into the tender period before expiry, you can end up having to take or give delivery through the exchange's vaults. Most brokers ask traders to close such positions a few days before the tender period starts.
- Options. Most MCX options devolve into the underlying futures at expiry, so an in-the-money option becomes a futures position that needs full futures margin.
Check your broker's cut-off dates for each contract; they are often earlier than the exchange's.
A worked example: Gold Mini
You buy one Gold Mini lot at ₹1,52,000 per 10 grams and the price rises to ₹1,53,200 two days later.
| Item | Amount |
|---|---|
| Margin blocked | ₹1,44,400 |
| Price change | +₹1,200 per 10 g |
| Gross profit (₹1,200 × 10) | ₹12,000 |
| Return on margin | 8.3% |
| The same move against you | −₹12,000 |
The price moved 0.79% and the margin returned 8.3%. Leverage works the same way on a loss: a 2% fall, ₹3,040 per 10 g, costs ₹30,400 on one lot, more than a fifth of the margin.
A worked example: Crude Oil Mini in the evening
You buy one Crude Oil Mini lot at ₹8,600 at 7:30 pm ahead of the US inventory report. The report shows a larger draw than expected and the price rises to ₹8,655.
| Item | Amount |
|---|---|
| Margin blocked | ₹26,875 |
| Price change | +₹55 a barrel |
| Gross profit (₹55 × 10) | ₹550 |
| Costs at ₹20 per order | about ₹62 |
| Net profit | about ₹488 |
Had the report gone the other way, a ₹55 fall would have cost the same ₹550 plus costs. Evening events move crude oil quickly, so a stop loss belongs in the plan before the trade.
Commodity trading in India: who trades and why
Commodity trading in India has three kinds of participants. Hedgers, such as jewellers, refiners and metal users, lock in prices for what they buy or sell. Traders take positions on price moves, intraday or over days. Arbitrageurs trade the gap between MCX and world prices. Retail traders are mostly in the second group, and most of their trading is in crude oil, natural gas, gold and silver.
Commodities behave differently from shares. They react to world events at any hour, gaps happen when MCX opens after a weekend, and supply news such as OPEC+ decisions or inventory reports can move a contract several percent in minutes. That suits rule-based trading, where entries, stops and position size are set before the move. QuantPower runs commodity strategies on MCX through connected brokers; see MCX algo trading.
How to start commodity trading
- Activate the commodity segment with your broker. You need a trading account with the commodity segment enabled; for F&O-style trading, brokers ask for income proof.
- Pick one contract. Gold Mini or Crude Oil Mini are common first choices because of their smaller lots.
- Learn its calendar. Note the expiry, the tender period for gold and silver, and the evening events that move it.
- Set the size from the stop. Work out how many lots your risk per trade allows; the position size calculator does this.
- Check the margin and costs before each trade, and keep funds above the margin for daily losses.
- Paper trade first with live prices, then trade small.
Records to keep
Your broker sends a contract note after every trading day with each trade, the CTT, exchange charges, the SEBI fee, stamp duty, GST and brokerage. Keep them, along with the broker's yearly profit and loss statement for the commodity segment. You need the turnover and the costs to file your return, to check whether a tax audit applies, and to claim the costs as business expenses. If you trade both equity F&O and commodities, ask the broker for statements by segment, because the two are often reported separately even though both are business income.
Commodity trading on QuantPower
QuantPower runs MCX strategies through the connected brokers that offer the commodity segment, with the same builder, backtests, paper trading and MTM limit as for equity F&O. Evening-session rules, such as entries after 7:30 pm or exits before 11:00 pm, are set as time conditions in the strategy.
Tax on commodity trading
Profit from commodity derivatives traded on a recognised exchange is non-speculative business income, like equity F&O. It is added to your income and taxed at your slab rate. CTT and other trading costs are deductible as business expenses, losses can be set off against other business income (not salary) and carried forward for eight years, and you report the income in ITR-3. A tax audit may apply above set turnover limits. The F&O taxation India guide covers the rules and the turnover calculation.
Which exchange trades what
| Exchange | Main contracts | Settlement |
|---|---|---|
| MCX | Gold, silver, crude oil, natural gas, copper, zinc, aluminium, lead | Cash for energy; delivery for bullion and base metals |
| NCDEX | Farm products such as guar, jeera, soybean and cotton seed oil cake | Mostly physical delivery |
| NSE and BSE | A smaller set of commodity contracts, including some bullion and energy | By contract |
Almost all retail volume in metals and energy is on MCX, so most of this guide uses MCX contracts.
Futures or options on commodities
| Futures | Options on MCX | |
|---|---|---|
| Cost to enter | Margin, a share of contract value | The premium, if you buy |
| Most you can lose | No fixed limit | The premium, for a buyer |
| Daily settlement | Profit and loss settled every day | Premium changes with the futures price |
| At expiry | Cash settlement or delivery, by contract | Most devolve into futures if in the money |
| Suits | Direct views on price, hedging | Defined-risk views, event trades |
Devolvement catches new traders out. An in-the-money MCX crude option held to expiry becomes a crude futures position the next morning, and the account needs futures margin for it. Close options before expiry unless you want the futures position.
What moves each commodity
| Commodity | Main drivers | Events to watch | When it moves most (IST) |
|---|---|---|---|
| Gold | US interest rates, the dollar, central bank buying, the rupee, import duty | US inflation and jobs data, Fed meetings, the Budget | Evening, with US data and the US open |
| Silver | Gold's drivers plus industrial demand | Same as gold; factory data | Evening |
| Crude oil | OPEC+ supply, US inventories, global growth, the rupee | Weekly US inventory report, OPEC+ meetings | Evening, around the inventory report |
| Natural gas | US weather, storage and production | Weekly US storage report | Evening |
| Copper | China demand, global growth | China data, London Metal Exchange prices | Afternoon and evening |
Because the drivers are global, an Indian commodity trader watches the US calendar more than the Indian one. A rule-based strategy can avoid entries in the minutes around scheduled reports.
Spot, futures and rollover
A futures price differs from the spot price by the cost of carry: interest on the money plus storage, less any benefit of holding the goods. For gold, the near futures usually trade above spot and later months above the near month. When a contract nears expiry, traders who want to stay in the position close it and open the next month, called rollover; the gap between the two prices is the cost of rolling.
Hedging with commodity futures: an example
A jeweller expects to buy 1 kg of gold next month and fears a rise in price. With MCX gold at ₹1,52,000 per 10 grams, the jeweller buys one Gold lot (1 kg) as a hedge, a contract worth ₹1,52,00,000.
- If gold rises to ₹1,55,000, the physical gold costs ₹3,00,000 more, and the futures position gains about ₹3,00,000.
- If gold falls to ₹1,49,000, the physical gold costs ₹3,00,000 less, and the futures position loses about ₹3,00,000.
Either way the jeweller's cost is fixed near ₹1,52,000 per 10 grams. A hedger gives up the gain from a fall to remove the loss from a rise. A trader without the physical exposure takes only one side of that, which is why the same contract is a hedge for one and a risk for the other.
Choosing a first contract
The three most traded mini contracts behave very differently for the same account.
| Contract | Contract value | Margin | Value of a 1% move | 1% move as a share of margin |
|---|---|---|---|---|
| Gold Mini (100 g) at ₹1,52,000 | ₹15,20,000 | ₹1,44,400 | ₹15,200 | 11% |
| Silver Mini (5 kg) at ₹2,30,000 | ₹11,50,000 | ₹1,55,250 | ₹11,500 | 7% |
| Crude Oil Mini (10 barrels) at ₹8,600 | ₹86,000 | ₹26,875 | ₹860 | 3% |
Crude Oil Mini needs the least money and moves least in rupees for each percent, but crude oil often moves several percent in a day, so its rupee swings are larger than the table suggests. Gold Mini's contract value is close to that of a Nifty futures lot, so it is not a small position.
Position size for commodity futures
Size a commodity trade from the stop, as with any futures trade, then check the margin. Take a ₹5,00,000 account risking 1% a trade, or ₹5,000.
- Crude Oil Mini, stop ₹40 a barrel away. The risk is ₹400 a lot, so the stop allows 12 lots. But 12 lots need ₹3,22,500 of margin, 64% of the account, and a 3% gap would cost ₹30,960. Here the margin and the gap risk limit the size, not the stop: 6 to 8 lots leaves room for daily losses.
- Gold Mini, stop ₹600 per 10 g away. The risk is ₹6,000 a lot, more than the ₹5,000 budget, so the size is zero. Gold Guinea (8 g) carries a risk of ₹480 a lot for the same stop, so 10 lots fit.
The position size calculator works out lots from your stop; enter the commodity's value per point as the lot size.
What trading costs over a month
Costs add up with frequency. At about ₹62 a round trip, a trader who makes five Crude Oil Mini round trips a day for 22 trading days pays about ₹6,820 a month. On the standard crude contract, at about ₹195 a round trip, the same activity costs about ₹21,450. Include costs in every backtest: a rule that makes ₹5 a barrel a trade on Crude Oil Mini earns ₹50 a lot before costs, less than the ₹62 it pays.
Commodity trading compared with equity F&O
| Commodity futures on MCX | Index F&O on NSE | |
|---|---|---|
| Hours | 9:00 am to 11:30 pm or 11:55 pm | 9:15 am to 3:40 pm |
| Price drivers | World prices, the rupee, supply news | Indian shares, flows, global markets |
| Transaction tax | CTT 0.01% of the futures sell value | STT 0.05% of the futures sell value |
| Weekly options | Not the norm; most options are monthly | Nifty weekly options on Tuesdays |
| Settlement | Cash for energy, delivery for bullion | Cash for index contracts |
| Tax on profit | Non-speculative business income | Non-speculative business income |
The lower transaction tax on commodity futures matters for active traders: on the same contract value, CTT is a fifth of the STT on index futures since April 2026.
Commodity trading with rules: an example
A rule set for Crude Oil Mini in the evening session might read:
- Mark the high and low of crude between 6:00 pm and 7:30 pm.
- Buy one lot if the price trades above the high after 7:30 pm; sell one lot if it trades below the low.
- Place the stop at the other side of the range.
- Take no new entry in the five minutes around the US inventory report.
- Exit any open position by 11:00 pm.
- Stop for the day after two losing trades or a loss of ₹1,500.
Each rule is something you can test on past data and run without watching the screen. The crude oil trading India guide develops strategies of this kind with model numbers.
Commodity terms
| Term | Meaning |
|---|---|
| Tender period | Days before a delivery contract's expiry when delivery intentions are given |
| Devolvement | An in-the-money option becoming a futures position at expiry |
| CTT | Commodity transaction tax on non-farm commodity derivatives |
| Contango | Later contract months trading above nearer ones |
| Backwardation | Later months trading below nearer ones, often when supply is tight |
| Mini and micro | Smaller lots of the same commodity |
Mistakes new commodity traders make
- Trading the standard lot first. Start with mini or micro contracts until the rules are tested.
- Ignoring the evening session. Most of the day's move in crude oil and bullion can come after 6:00 pm.
- Holding bullion into the tender period. It can lead to delivery obligations and extra margin.
- Letting options devolve. An in-the-money option at expiry becomes a futures position that needs margin.
- Watching only the MCX price. The world price and the rupee drive it; a quiet MCX chart can hide a large overnight move abroad.
- Sizing by margin. Margin tells you what the broker blocks, not what a gap can cost.
Risks to know before you trade
- Leverage. A move of a few percent can wipe out a large share of the margin.
- Gaps. World prices move while MCX is closed, so Monday's open can jump past your stop.
- Margin increases. MCX raises margins in volatile markets, sometimes at short notice.
- Delivery. Holding gold or silver futures into the tender period can lead to delivery obligations.
- Extreme events. In April 2020, the US crude contract settled below zero, and MCX crude settled at a negative price for that expiry.
Start your free trial
Connect your broker, build a strategy and test it on paper before a single live order goes out.
Frequently asked questions
Is commodity trading legal in India?
Yes. Commodity derivatives trade on SEBI-regulated exchanges such as MCX and NCDEX, through brokers registered with SEBI.
Who regulates commodity trading in India?
SEBI. It took over from the Forward Markets Commission in September 2015, and the exchanges set contract rules and margins under its framework.
What is the minimum amount needed for commodity trading?
It depends on the contract. A Crude Oil Mini lot needed about ₹27,000 of margin in September 2026, and a Gold Mini lot about ₹1.44 lakh. Keep more than the margin to cover daily losses.
Which commodity is best for beginners?
A mini contract in a liquid market, such as Gold Mini or Crude Oil Mini, because the lots are smaller. Crude oil moves faster, so it needs tighter risk control.
How is commodity trading income taxed?
As non-speculative business income at your slab rate, with costs including CTT deductible. You report it in ITR-3.
What is CTT?
Commodity transaction tax: 0.01% of the sell value on non-farm futures and 0.05% of the sell premium on options. Most farm commodities are exempt.
Can I trade commodities with my equity broker?
Yes, if the broker offers the commodity segment and you activate it. Most large brokers, including those QuantPower connects to, offer MCX trading.
Related guides
- Gold commodity trading: gold and silver contracts, price build and four strategies
- Crude oil trading India: the crude contracts, the trading day and four strategies
- MCX market timings: sessions and the 2026 holiday list
- MCX algo trading: running commodity strategies in QuantPower
- F&O taxation India: how F&O profit and losses are taxed
Sources
- SEBI: merger of the Forward Markets Commission with SEBI, September 2015; commodity derivatives framework
- MCX: contract specifications, trading hours and settlement methods for bullion, energy and base metals
- Finance Act, 2013 and later amendments: commodity transaction tax rates
- Broker margin data for MCX bullion and energy contracts, September 2026; prices on this page are illustrative