Derivatives and Commodity Exchange Nepal (DCX Nepal) is a commodity exchange that offers a state of the art trading software.
What is traded in DCX Nepal?
We offer trading in commodity futures.
What are futures?
A future contract is a type of derivative instrument, or financial contract, in which two parties agree to transact a set of financial instruments or physical commodities for future delivery at a particular price. Future contracts expire after a set amount of time. Most future contracts do not end in delivery of the underlying product. They are mostly used to hedge against future prices, or to speculate.
How are future contracts traded?
The contract size of futures is set by the exchange. One can buy, or go long on a future contract, or one can sell, go short. To buy a contract, one has to deposit the margin amount set by the exchange.
What is leverage?
In futures you don’t have to put the entire money for the future contract. You only have to put a small amount known as margin, which is only a small percentage of the full amount.
What are margins?
Margin is the least amount of money required to buy a future contract.
What are the trading hours?
Trading hours take place on all days of the week (except Sundays and holidays declared by the Exchange).
What commodities futures are traded in DCX Nepal?
Currently we offer futures trading in Gold, Silver, Copper, Crude Oil, and Natural Gas.
How does one go about trading futures?
To trade futures with us, you need to open a segregated account at Nepal Investment bank limited. Once you have opened the account and funded it, you can start trading by downloading our software.
To be successful in trading, one has to learn about trading strategies like Fundamental analysis, technical analysis, and risk management.
Do you provide training?
Yes, DCX Nepal provides training in all there is to know about commodities market, as well as in Fundamental analysis, Technical analysis, and Risk management.
Where is our Office?
We are currently located at Alfa Beta Complex, New Baneshwor on the first floor.
Who can be a client and trade with us?
Client must be over 18 years of age.
How much money is needed to invest in the commodities market?
In the commodities market you need to put up the initial margin required by the futures contract you wish to trade. Currently this can be as low as Rs. 1000(plus commissions) for a 10GM Gold contract.
Types of Orders:
What is a Market Order?
Market Order is an order initiated in the current market price.
What is a Limit Order?
It is a contingent order placed by a trader.
Buy Limit: The order which can be executed at current or below the ongoing market price.
Sell Limit: The order which can be executed at current or above the ongoing market price.
What is a Stop Order?
It is also a contingent order placed by a trader.
Buy Stop: The order which can be executed at current or above the ongoing market price.
Sell Stop: The order which can be executed at current or below the ongoing market price.
Who participates in futures trading?
There are three types of participants:
Hedgers: Hedgers want to mitigate the risk from future price fluctuations.
Speculators: Speculators predict future price movements, and take a long or short position.
Arbitrageurs: A type of investor who attempts to profit from price inefficiencies in the market by making simultaneous trades that offset each other and capturing risk-free profits.
What is 'Contango'?
Contango means a situation, where futures contract prices are higher than the spot price and the futures contracts maturing earlier.
What is 'Backwardation'?
When the prices of spot or contracts maturing earlier are higher than a particular futures contract, it is said to be trading at Backwardation.
What is 'basis'?
It is normally calculated as cash price minus the futures price. A positive number indicates a futures discount (Backwardation) and a negative number, a futures premium (Contango). Unless otherwise specified, the price of the nearby futures contract month is generally used to calculate the basis.
What is offset?
Offset refers to the liquidation of a futures contract by entering into opposite (purchase or sale, as the case may be) of an identical contract.
What is convergence?
Convergence refers to the tendency of difference between spot and futures contract to decline continuously, so as to become zero on the date on maturity.
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