MCX Trading Basics in India: Contract Specs, Lot Sizes and a Worked Example

What MCX Is and How It Is Regulated Today

The Multi Commodity Exchange of India Limited (MCX) is the country's largest commodity derivatives exchange by volume, headquartered in Mumbai and operating since 2003. You do not trade physical sacks of metal or barrels of oil here. You trade standardised futures contracts and options on commodities, where each contract is a legally fixed quantity at an agreed price for a future settlement date.

A common point of confusion is the regulator. Until 2015, commodities were overseen by the Forward Markets Commission (FMC). The FMC was merged into the Securities and Exchange Board of India (SEBI) in September 2015, so today MCX, NSE equities and BSE equities all sit under one regulator. That means the same broker, the same SEBI investor protection framework, and unified margin and reporting rules apply across your equity and commodity trades.

MCX commodities fall into four buckets: bullion (gold, silver), energy (crude oil, natural gas), base metals (copper, zinc, aluminium, lead, nickel) and agri (cotton, mentha oil, cardamom and a handful of others). Bullion and energy are by far the most liquid for retail traders.

Current MCX Contract Specifications You Must Know

This is where most old guides go wrong. They quote a gold contract as 1 kg and a price of Rs 50,000 per 10 grams, which produces incorrect numbers. The reality in 2026 is different. MCX offers both a full-size and a mini contract for each major commodity so retail traders can take smaller positions. Below are the lot sizes and tick sizes that actually drive your profit and loss. Tick size means the smallest price step the contract can move.

How Contract Value Actually Works (The Gold Example Corrected)

GOLD on MCX is quoted per 10 grams but the lot is 1 kg, which is 1000 grams, so the multiplier is 100. The formula is: contract value = quoted price per 10 grams times 100. With an illustrative 2026 gold price of Rs 1,00,000 per 10 grams, a single GOLD (1 kg) contract is worth Rs 1,00,000 times 100, which is Rs 1,00,00,000, that is one crore rupees of notional exposure. The old guide figure of Rs 50,00,000 was both an outdated price and a miscalculated multiplier.

Because Rs 1 crore is far too large for most retail traders, the GOLDM (Gold Mini) contract of 100 grams is the realistic choice. Its multiplier is 10 (100 grams divided by the 10-gram quote). At Rs 1,00,000 per 10 grams, a GOLDM contract is worth Rs 1,00,000 times 10, which is Rs 10,00,000, or ten lakh rupees of notional. You typically post around 6 to 10 percent of that as margin, so roughly Rs 60,000 to Rs 1,00,000 to hold one GOLDM lot. These figures are illustrative and the exchange and your broker set the exact margin daily.

A Fully Worked GOLDM Trade With Rupee Profit and Loss

Here is a complete, realistic example. All numbers are illustrative and not a forecast or a promise of returns. Suppose you expect gold to rise ahead of a festival season and you buy 1 lot of GOLDM (100 grams) at a quoted price of Rs 1,00,000 per 10 grams. Each 1-rupee move in the per-10-gram quote changes your position by Rs 10, because the multiplier is 10.

Say gold rises to Rs 1,01,200 per 10 grams over the next few sessions, a move of Rs 1,200. Your gross profit is Rs 1,200 times 10, which is Rs 12,000 on one GOLDM lot. If instead gold fell Rs 800 to Rs 99,200, your gross loss would be Rs 800 times 10, which is Rs 8,000. The same leverage that produces the Rs 12,000 gain produces the Rs 8,000 loss, which is exactly why position sizing and a stop-loss matter.

Now the costs. On a buy then sell round trip, the main charges are CTT (Commodities Transaction Tax) at 0.01 percent on the sell side of non-agri futures, brokerage (a discount broker typically charges about Rs 20 per executed order or 0.03 percent, whichever is lower), exchange transaction charges, GST at 18 percent on brokerage plus exchange charges, SEBI turnover fees and stamp duty on the buy side. On a sell turnover near Rs 10,12,000, CTT is about Rs 101, brokerage is about Rs 40 for both legs, and exchange plus GST plus stamp and SEBI fees add roughly another Rs 100 to Rs 150. So total costs are roughly Rs 250 to Rs 350 on this trade.

Margin, Leverage and the M2M Settlement

MCX positions are marked to market every day. Margin has two parts set by the exchange: SPAN margin, which is risk-based, and Exposure margin, an additional buffer. Together they usually run from about 5 percent on calmer commodities to 12 percent or more on volatile ones like crude oil and natural gas. Since the SEBI peak-margin rules, brokers must collect the full upfront margin, so the days of tiny intraday margins are over.

Every evening the exchange settles your open position against the daily settlement price. If the market moved against you, the loss is debited from your account that night through mark-to-market (M2M); if it moved in your favour, the profit is credited. If your balance falls below the maintenance level you get a margin call and must add funds, or the broker can square off your position. Never confuse the small margin with the real risk: a 2 percent move in a contract you hold at 8 percent margin is roughly a 25 percent swing on your deposited capital.

• SPAN plus Exposure margin is the total upfront amount you must have to hold a position.
• M2M profit or loss is settled daily in cash, not only when you exit.
• A margin call means add money the same day or risk a forced square-off.
• Hold positions overnight only if you can fund a gap move against you at the next open.

Expiry, Settlement and Delivery Mechanics

Each MCX futures contract has a fixed expiry. Bullion and base metals usually expire on the 5th of the contract month (or the previous working day if the 5th is a holiday), while crude oil and natural gas follow a monthly cycle tied to their global benchmarks. Unlike NSE equity index options that now expire weekly, most MCX commodity contracts are monthly, although MCX has introduced options and shorter-dated products on selected commodities.

Settlement type matters a great deal. Many MCX contracts, including gold and silver, are compulsory delivery or staggered delivery contracts. That means if you carry a position into the delivery window without an intention or the ability to give or take physical delivery, you can face penalties or be forced into the delivery logistics. Crude oil and natural gas are typically cash settled against the benchmark price. As a retail trader you almost always want to close or roll your position well before the contract enters its delivery or tender period.

How MCX Profits Are Taxed in India

This is one of the biggest misunderstandings among new traders. Profit or loss from commodity futures and options is treated as business income, not as capital gains. So the equity rules of 20 percent STCG on shares held under a year and 12.5 percent LTCG above Rs 1.25 lakh do not apply to your MCX trading. Those equity rates apply when you buy and sell shares, not when you trade futures.

Because it is business income, your net commodity profit is added to your total income and taxed at your applicable slab rate. The big advantage is that you can deduct genuine trading expenses such as brokerage, internet, data subscriptions, and CTT, and you can set off and carry forward non-speculative business losses against other business income for up to eight assessment years, subject to filing your return on time. Most non-agri commodity F&O is treated as non-speculative business. If your turnover crosses the prescribed limits, a tax audit may be required. Always confirm the current thresholds with a qualified chartered accountant, as the rules and limits change.

Risk Management for MCX Traders

Commodities can be more violent than equities because they react to overnight global moves in the US dollar, US crude inventories, OPEC decisions and geopolitical shocks. Crude oil and natural gas in particular can gap several percent at the open. The single most important habit is position sizing: risk only a small, fixed fraction of your capital per trade so that no one bad print can damage your account.

Using the worked example above, if a Rs 800 adverse move equals an Rs 8,000 loss on one GOLDM lot, and your rule is to risk no more than 1 percent of a Rs 5 lakh account, that is Rs 5,000 per trade. So you would either place a tighter stop or trade a smaller exposure. Define the stop in rupees before you enter, not after the market moves against you.

• Decide your maximum rupee loss before entering, and convert it into a price-based stop-loss order.
• Avoid holding leveraged crude oil or natural gas positions over weekends and major data releases unless you can absorb a gap.
• Do not average down on a losing futures position just because margin allows it.
• Keep a trading journal with entry, exit, lot, costs and the reason for each trade, so you can review what actually works.

Hedging With MCX Versus Pure Speculation

Not everyone on MCX is a speculator. A jeweller who has bought physical gold inventory can hedge by selling gold futures, so that if the gold price falls, the loss on physical stock is offset by the gain on the short futures. A bulk diesel consumer can hedge crude exposure. For these participants the goal is not profit on the hedge but stability of their core business margin.

As an individual trader you can borrow the same logic. If you hold a basket of gold-related stocks or a sovereign gold investment and fear a short-term pullback, a short GOLDM position can offset part of that risk without you selling your long-term holding. The key is to size the hedge to your actual exposure rather than over-hedging, which simply converts one directional bet into another.

Trading Hours and Liquidity on MCX

MCX has long trading hours that overlap with international markets, which is one of its biggest attractions. Non-agri commodities such as gold, silver and crude oil trade from around 9:00 am to 11:30 pm (extended to 11:55 pm during US daylight saving time), while agri commodities trade until around 9:00 pm. These late hours let Indian traders react to US economic data, the COMEX gold move and the EIA crude inventory report on the same day.

Liquidity is heavily concentrated. Gold, silver and crude oil dominate volumes, with their mini contracts (GOLDM, SILVERM, CRUDEOILM) providing retail-friendly size. Always trade the most liquid contract and the front-month series, because thin contracts have wide bid-ask spreads that quietly eat your profit. Check the open interest and volume before committing to anything outside the top few commodities.

How to Start Trading on MCX, Step by Step

• Open a trading and demat account with a SEBI-registered broker that offers the MCX segment, and complete KYC including PAN and bank linkage.
• Activate the commodity (MCX) segment specifically, since it is often separate from the equity and equity-F&O segments.
• Fund your account with enough to cover SPAN plus Exposure margin for the contract you intend to trade, with a buffer for M2M debits.
• Start with a mini contract such as GOLDM, CRUDEOILM or SILVERM to keep your rupee risk small while you learn.
• Place a stop-loss with every entry, record the trade in a journal, and review your net results after all costs each week.

Treat your first weeks as tuition. Trade one mini contract, accept that the goal is to learn execution and risk control rather than to get rich, and scale up only after your journal shows a consistent, cost-aware edge. The leverage that makes MCX exciting is the same leverage that ends careless accounts, so respect it from day one.

Sources and Further Reading

For authoritative data and current rules, refer to MCX (Multi Commodity Exchange), SEBI (Securities and Exchange Board of India), Zerodha Varsity and the Income Tax Department. Always confirm the current lot size, tick size, margin, expiry and tax rules on the official source before you trade, because the figures in this guide are illustrative and subject to change.

Sources and Further Reading

For authoritative data and further reading on this topic, refer to MCX (Multi Commodity Exchange), SEBI (Securities and Exchange Board of India), Zerodha Varsity and Income Tax Department. Always confirm current rules, rates and contract specifications on the official source before you trade.