Understanding MCX & Commodity Trading Basics

What this unit covers

Learn how commodity trading works in India: the MCX exchange and contract terms like lot size and delivery, building on what you learned about futures contracts.

By the end you will be able to

• Explain what MCX does and why it exists.
• Identify lot size, expiry date, and delivery terms as the fields a commodity contract commits you to.
• Apply the habit of checking contract terms before reacting to price on a commodity trade.

How it starts: Gold Is Rising

1. Someone tells you they bought a gold contract on MCX today.
2. You ask what price they paid, but not what the contract actually promises.
3. You realise you cannot say what that contract makes them agree to.

Words you will meet

MCX (Multi Commodity Exchange)

India's exchange where standardised commodity futures contracts, such as gold and crude oil, are traded.

Lot size

The fixed amount of a commodity that one futures contract represents.

Expiry date

The date a futures contract ends and must be settled.

Delivery terms

The rules for whether a contract settles in cash or ends with the physical commodity handed over.

Underlying asset

The thing a contract's value is based on, such as gold or an index.

In this module: Commodity Markets

1. What Are Commodities?
2. Energy, Metals & Agricultural Commodities
3. Supply, Demand & Global Cycles
4. Understanding MCX & Commodity Trading Basics (this unit)