In MCX, there are five contracts in gold — Gold (1 kilogram), Gold Guinea (8 gram), Gold HNI (10 gram), Gold M (100 gram) and the recently introduced — Gold Petal (1 gram). The contract is settled on the expiry date before which the trader is required to either square his position by selling it or pay the full value to take delivery.

In a gold futures contract, the initial margin requirement is 4 per cent. An additional margin according to the specifications of the exchange would be levied only in cases of high volatility in price.

What does this mean?
Lets say, you want to buy one lot of "Gold M (100 gram)" in futures, you need only 4% margin. It means you need cash for only 4 grams (4% on 100 grams). Lets say 1 gram Gold trades at 3000 Rupees. You would need 12,000 Rupees to buy one lot of "Gold M (100 gram)" in futures.

Lets say, you buy at 3000 and sell at 3030. You will gain 3000 Rupees (30 * 100) on your investment of 12,000 Rupees. Its a similar case with losses if it drops below 3000.

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