Commodity Margin Trading (MCX/NCDEX)

Commodity Margin Trading (MCX/NCDEX)

Commodity margin money is the amount that a trader has to deposit with his broker before trading in commodities. It is expressed as a percentage of the contract value and depends on the traded commodity and the exchange platform. The margin money ensures that the account has sufficient balance to cushion against any trading loss. The position of a commodity trader is marked to market (MTM) everyday. The profit or loss is adjusted against the margin account balance. If the margin balance falls to a predefined threshold, the broker may ask the trader to bring in additional margin money.