Trade E-Gold National Spot Exchange (NSEL): Finance Trading Times

Trade E-Gold National Spot Exchange (NSEL)

Details & Information about trading E-Gold as commodity on National Spot Exchange (NSEL)
It was recently when we covered the details about Trading E-Silver on National Spot Exchange. In this article, we will focus on another precious metal and the hot favourite of India for investment - Gold.
Traditionally, India has been known as the largest consumer of physical gold, and that continues till date. People have been buying Gold in physical form and storing it as an investment since long time. With the invest of electronic trading and other contracts, the gold investments have taken a new path. No more buying of physical gold, no more storing it in safe lockers, rather go the electronic way and get the gold investments safely into your demat account.

To enable such E-Gold trading, the National Spot Exchange (NSEL) has a good product called E-Gold which allows individual small investors to trade in Gold in electronic form, without having take physical delivery. There are many benefit of E-Gold trading and investments, which we will list below.

E-Gold Trading on National Spot Exchange (NSEL)

First, let's begin with the basic details of E-Gold Trading:
How can I trade E-Gold?
It's simple. Just open a demat account (like the one required for share trading) with a DP/Broker who has the membership to allow its clients to trade in the E-series on National Spot Exchange of India (NSEL). Once you get that, you can begin trading by simply placing your buy and sell orders through phone/internet, depending upon what channels your broker provides for trading and transactions.

What are the timings for E-Gold on National Spot Exchange (NSEL)?
This is a bit tricky part. The E-series products E-Gold (and E-Silver) have very long trading hours 10:00 AM to 11:30 PM - i.e. 13:30 hours of non-stop trading. E-Gold Trading
In one way, it is good as you can buy sell at the time you wish. However, it becomes difficult for traders to trade for such long time. Another issue is that all these commodities and their prices are influenced by international rates (Remember the recent fluctuations in silver prices). So if you are a trader and have bought E-Gold say at the price of 20,000 in the morning, it is quite possible that by the time the trading ends on the NSEL exchange, the prices may come down substantially. You need to be alert for this kind of trading fluctuations for long trading hours.
The trading days for NSEL for E-Gold trading are usually Monday to Friday (except Bank Holidays)

What will be the underlying unit for E-Gold?
Each E-Gold unit will be comprised on 1 Gram of pure gold with 995 purity level.

What is the lot size and tick size for E-Gold trading?
One can trade E-Gold in 1 unit and its multiples, and the maximum lot size is set to 10,000 units of E-Gold.
The tick size indicates the minimum price movement, and that is set to 10 paisa. That means, any price will have to be quoted in multiples of 10 paisa only for E-Gold trading.

What are the margin requirements for E-Gold Trading?
The exchange has set the initial margin as 5% and delivery margin as 10% for trading E-Gold.
However, depending upon the broker you wish to trade with, the margin requirements might vary, please confirm with your broker about that.

What is the settlement cycle for E-Gold?
E-Gold contracts follow T+2 settlement cycle.

What are the risks in trading E-Gold?
Please note that there is the general price fluctuation risk which is always there. We have seen that happening for Silver prices recently, and to some extent gold prices are also fluctuating. So whether your buy (go Long on E-Gold) or sell (go short on E-Gold), the price movement will affect your trading profits.
Then, as mentioned above there is the long trading hours risk. What if you purchase something at high price in the morning and it comes down substantially due to international price changes by the time the exchange closes?
Third, you need to accept the risk of international price changes which might happen overnight, when the exchange is closed.
Transaction costs will again be another thing to look at and it will vary from broker to broker.
Then, all the brokers you generally trade with, may not have NSEL membership for allowing trading in E-Gold. You may have to incure extra charges for trading on NSEL listed products

What are the other competitor products available in the market againsts E-Gold?
There are lots of Gold Based ETF's which one can consider. Since majority of the gold based ETF are listed on common exchanges like NSE and BSE, you can save charges for getting a NSEL exchange trading account - again, check with your broker. Here is the List of Gold ETF India available for trading on NSE

HDFC has its own HDFC Gold ETF

Then there is the good old Quantum Gold Fund (Gold ETF) and ICICI Prudential Gold ETF, then SBI GETS-SBI Gold ETF: SBI Gold Exchange Traded Scheme

Other than the Gold Based ETF's, there are some Gold based Funds, but do read the following articles to understand how they work, as they are not directly similar to E-Gold or Gold ETF. The recently lauched Reliance Gold Savings Fund (See Review & Details)

If you are interested in looking at how Gold prices have performed historically, see Gold ETF: Historical Performace of Gold ETF
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