I was looking at the participation numbers across different market segments and found something interesting.
Equity F&O attracts close to 1 crore participants annually.
Commodity trading (MCX) has only a fraction of that participation, likely in the low lakhs.
Despite commodities offering leverage, trend-following opportunities, and diversification, most retailers seem to prefer index options over commodities.
Why do you think this is the case?
My thoughts:
1.Weekly Expiries.
2.Social Media Influence.
3. Get-Rich-Quick Mindset
MCX is not stable as NSE. Leveraged positions and their unstable exchange with many issues could land you in waters very quickly. Also international commodity futures have no circuit filters, while mcx enforces it, making any adverse movement in commodity international markets devastating in mcx, as you’ll be unable to exit. There are also other issues like random expiry days - which you need to look up a sheet, lack of equivalent options for hedging same type of futures like no Silver100 options for futures and probably many more.
The better way to judge liquidity is to see the bid ask difference in gold and silver contracts, i have tried and quit, spread cost is way more than transaction cost, sometimes even for a single fut contract on the peak commodity trading hours, for options all you have to do is check option chain. Try trading
I trade SilverM/GoldM Futures. The bid ask difference is around 0.02-0.05% in Silver. GoldM is often tighter 0.02- 0.03%. CTT is 0.01%. It is tradeable if you have a good positional strategy, and you dont trade more than say 50 trades in a year.
Trading mcx and trading mcx with size are two different things, a lot of intraday traders don’t look for huge upmoves within a day and rather focus on multiple trades within a day, and if it’s not scalable it’s not tradable atleast intraday. By liquidity i meant liquidity that allows you to scale
You cant really do that in Gold/Silver Fut, I’d say its not viable doing that with Nifty Fut too.
And you can size better with Silver/Gold Fut instead of the mini contracts
I used to do silver/ gold fut intraday. Limit orders would skip so many times and it is hard to keep looking at bid and ask when you have decided to exit and then market orders would almost always surprise me with executed price. None of this is a problem in index options ( never tried nifty fut)
