What should be the minimum capital for commodity trading?

Last Updated: 10 Sep 2025

When it comes to trading, one question always comes up: how much money do you really need to start? Commodity trading is no exception. Many investors are drawn to it because it offers both diversification and profit potential. But before stepping in, knowing the minimum capital requirement is crucial. It helps you plan better, manage risks, and choose the right commodities to trade. In this guide, we’ll explore how much money is required for commodity trading and what beginners should keep in mind.

If you are intrigued by the idea of commodity trading, read on.

What is commodity trading?

Commodities’ trading involves trading in every kind of movable property other than actionable claims, money, and securities. These include gold, silver, and other metals and select agricultural commodities. Currency trading refers to the exchange of currencies, where the difference in the currency value is used to make profits. It is a huge market, with the traded value being higher than equities.

Types of commodities

Although there are hundreds of commodities to trade on any of the exchanges; the most common types of commodities are as follows:

Commodity sectors	Constituents
Agriculture	Grains: Rice, Basmati rice, wheat, maize, jeera. Oil and oilseeds: Castor seeds, soy seeds, castor oil, refined soy oil, soy meal, crude palm oil, groundnut oil, mustard seed, cottonseed, etc. Spices: Pepper, red chili, jeera, turmeric, and cardamom. Pulses: Chana, urad, yellow peas, tur dal.
Metals and materials	Base metals: Aluminum, copper, nickel, zinc, tin. Bulk commodities: Iron ore, coking coal, bauxite, steel. Others: Soda ash, chemicals, rare earth metals.
Precious metals and materials	Gold, silver, platinum, and palladium.
Energy	Crude oil, natural gas, Brent crude, thermal coal, alternate energy.
Services	Oil services, mining services, and others.

What is the minimum amount required for commodity trading?

Technically, there is no fixed minimum capital for commodity trading. You can start with any amount based on your risk appetite and the commodities you want to trade. However, some commodities require you to buy in set quantities. For example, crude oil contracts often represent 100 barrels, which means you need to invest a sizable amount to trade.

Brokers require you to deposit only a portion of the contract value. This is called the margin requirement. Suppose gold has a 5% margin requirement. You only have to shell out ₹2,50,000 to trade a ₹50 lakh contract. The margin for silver could be about 8–10%. It means you could deposit just ₹60,000–₹70,000 to take a position worth many lakhs.

If you have lower capital, you can start with commodities that have smaller contract sizes or lower margin requirements, such as mentha oil, cotton, or some mini contracts available on MCX. This way, you can begin trading without needing to buy in bulk or risk too much upfront.

Best asset allocation for commodity trading?

Trading commodities is a very effective way to hedge against portfolio losses for those who have investments in other forms of assets like stocks and bonds. You can invest between 5% and 15% of your total investment capital into commodity trading. But it makes sense to invest in things that you believe will be around for decades and can be deemed as essential, for example, pulses, crude oil, gold, etc.

How to start commodity trading?

All you need is a commodity trading account to start trading in commodities. IIFL Capital Services Limited has made it simpler to open a commodity trading account and start trading immediately. As one of the leading players in the broking space in India, we offer broking services in various categories of equity, commodities, currency, derivatives, and so on. A strong in-house research team and an excellent customer support system support these services.

Conclusion

Due to its flexible process, there is no minimum amount for commodity trading. Once your account is opened, you can start trading with the capital you have. However, it is wise that you understand commodity trading in detail before you start trading. For this, you can peruse IIFL Capital Services Limited’s knowledge centre, which defines in detail the commodity trading process.

Frequently Asked Questions

How much investment is required for commodity trading?

There is no required investment for commodity trading. You can start with any amount you feel comfortable with. Once you know which commodity you want to trade, you can go ahead with the capital you have and start trading.

Can I start commodity trading with 1000 rupees?

Yes, you can start commodity trading with as little as 1000 rupees if you pick mini or micro contracts with low margin requirements. However, the options will be limited, and profits may also be small. It is best to increase capital for better opportunities gradually.

Is commodity trading profitable for beginners?

Commodity trading can be profitable for beginners, but it also carries high risks. Success depends on understanding the market, using proper strategies, and managing risks. Beginners should start small, practise with demo accounts, and avoid overtrading. With patience and discipline, profits are possible, but losses are equally common.