Commodity futures is a new investment avenue that many people in India are turning into. But as in the stock market, there is risk of investment and speculation in commodities trading too.

So if you are a beginner in commodity futures trading, read, understand and be updated about the guidelines and circulars of the national commodity exchange and of the Forward Markets Commission.

Here is a beginner's guide to safe commodity investing:

Refer and understand all the provisions of Forward Contracts (Regulations) Act, 1952 dealing with futures trading in commodities and amendments thereof from time to time, including provisions and rates relating to the sales tax, value added tax, APMC Tax, Mandi Cess and Tax, octroi, excise duty, stamp duty, etc., applicable on the underlying commodity of any contracts offered for trading by the national commodity exchanges - the Multi Commodity Exchange, the National Commodity and Derivative Exchange and the National Multi Commodity Exchange.

Read the commodity contracts circulars issued by the exchanges and carefully note the contract specifications of the commodity in which you wish to trade. The contract specifications are subject to change from time to time.

Before entering into buy and sell transactions please be aware of all the factors that go into the mechanism of pricing, trading and clearing.

Read the product note of the commodity in which you wisht to deal to understand the commodity and parameters that impact on the trading and settlement of the commodity.

Understand the Delivery & Settlement Procedures of the commodity that you wish to deal in the futures market.

Study historical and seasonal price movements of the commodity that you wish to deal in the futures market.

Keep track of the governments' policy.

Do not fall prey to market rumours.

Do not go by any explicit/implicit promise made by analysts/advisors/experts/market intermediary until convinced.

Do not deal based on Bull/Bear run of commodity markets sentiments.

Do not go by the reports/predictions made in various print and electronic forms without verification.

Do not trade on any product without knowing the risk and rewards associated with it.