Groww Logo
Home>Personal Finance>What is Copper Futures
SHARE

What is Copper Futures

When it is compared to other metals such as steel and aluminium, copper does not garner much attention. However, it can be found at large levels in every home and office. Copper wires and pipes are widely utilized in homes, workplaces, and factories due to their outstanding conductivity and other qualities. After steel and aluminium, copper is the third most consumed metal on the planet. 

Copper is utilized in motor windings, air conditioner tubes, refrigerator tubes, and heat exchanger tubes, in addition to electrical wires. Copper is becoming more popular as a trading commodity. This is normally accomplished through the use of copper futures contracts.

Importance of Investing in Copper

  • Copper is a highly tradable metal with well-defined chart patterns.
  • Since copper is priced in US dollars, the value of the dollar has an impact on the price of copper.
  • Technical and fundamental analysis are used in copper trading methods.
  • When emerging markets flourish, copper prices tend to rise since demand is mostly driven by building and construction.

What are Copper Futures?

A copper futures contract is an agreement between traders to sell or acquire copper at a specific date in the future. To buy contracts on an exchange, futures traders employ leverage. If prices fall, the trader must supply additional funds (margin) in order to keep the position open.

When a futures contract is set to expire, the trader must choose between accepting physical delivery of the commodity or rolling the position forward to the following month. Copper futures are considered a more sophisticated approach to trade because they demand active position management by the trader.

Copper Futures Investing Explained

Copper futures investing appears to be a profitable endeavour because copper demand will be high in the future. Futures are traded on Indian commodities markets such as the Multi-Commodity Exchange (MCX).

The leverage is the most significant benefit of trading copper futures. These futures have minimal margins, allowing investors to establish large bets on the commodity. The celestial placements indicate that there are greater prospects to earn. Large positions, of course, carry the risk of significant losses if prices move in an unfavourable direction.

End-users can utilize copper futures to protect themselves against price volatility. Price changes can also be used by speculators, who benefit from them. They're also a good choice for investors looking to diversify their holdings.

Other Methods to Trade Copper

  1. Copper in Physical Form: This occurs when you buy a physical quantity of copper and keep it as an asset until you're ready to sell it.
  2. CFDs: Trading CFDs allows you to trade real-time price changes without purchasing physical copper. Because CFDs are leveraged products, you can get full exposure to the underlying trade by investing a tiny amount. Profits and losses are amplified since the profit or loss is determined based on the full magnitude of the trade position.

Factors that Affect Copper Price

Copper, like many other metals, has an inverse relationship with the US Dollar (see chart below), which means that as the US Dollar depreciates, copper prices normally rise, and vice versa. It's crucial to note that this isn't a one-to-one relationship (delta 1), but it does have a high degree of correlation.

Since copper is valued in US dollars, the US Dollar has an impact on the price of copper. If the value of the US dollar falls, for example, a buyer will have to spend less of his or her own currency to buy a certain amount of copper. As a result, the commodity (copper) becomes less expensive to purchase. This typically would lead to an increase in demand and, as a result, a rise in copper prices.

Benefits of Trading Copper Futures

Investing in copper futures might be advantageous for investors because demand will always rise. Copper prices, like those of all commodity markets, are erratic. Domestic and international issues that may affect demand and cost must be considered by investors. These can be quite profitable if you can stay up with the latest advances in the sector while maintaining a level head.

 

What is Copper Futures - FAQs

How is copper being traded?

Copper can be traded using a variety of trading instruments, depending on whether or not the trader owns the physical product. Bullion, contracts for difference (CFDs), futures, options, shares, and ETFs are the most common ways to trade copper through a broker or exchange.

What is copper's future price?

You will have to check the copper futures live price in order to know the fluctuating prices.

What is the meaning of buying a copper future?

A copper futures contract is an agreement between traders to sell or acquire copper at a specific date in the future. To buy contracts on an exchange, futures traders employ leverage.

Is copper a good investment?

Due to its industrial and commercial enterprise value, copper bullion has a particular value in the global market.

What's the best method to get started investing in copper?

Copper is traded through exchange-traded funds (ETFs), futures, and mining stocks, just like other commodities.

Looking to Invest?
Open an account with Groww and start investing for free
INVEST NOW
ⓒ 2016-2022 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 3.2.4
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  ICICI PRUDENTIAL |  HDFC |  NIPPON INDIA |  ADITYA BIRLA SUN LIFE |  SBI |  UTI |  FRANKLIN TEMPLETON |  KOTAK MAHINDRA |  IDFC |  DSP |  AXIS |  TATA |  L&T |  SUNDARAM |  PGIM |  INVESCO |  LIC |  JM FINANCIAL |  BARODA PIONEER |  CANARA ROBECO |  HSBC |  IDBI |  INDIABULLS |  MOTILAL OSWAL |  BNP PARIBAS |  MIRAE ASSET |  PRINCIPAL |  BOI AXA |  UNION KBC |  TAURUS |  EDELWEISS |  NAVI |  MAHINDRA |  QUANTUM |  PPFAS |  IIFL |  Quant |  SHRIRAM |  SAHARA |  ITI