To understand intraday and carryfoward in commodities let me explain in detail with an example

Intraday position : If you initiate an intraday position in commodities, it means that you want to hold the position only for the day(till closing hours of trade for that day which is generally 11:30 or 11:45 PM IST in case of commodities i.e MCX timings). Hence, if you do not square off your positions on your own, your broker will automatically square off your position as per the rules of the brokerage firm (For Zerodha I think it is 11:30 or 11:15) meaning your position will be closed for the price available at that time.

Ex : Say you have 1 lot zincM buy at Rs 213 and type of position is intraday and you forget to square off yourself. At 11:15 , the price is 212 and it is auto squared off by broker for Rs 212 and you make a loss of Rs 1000 in that trade. It may also happen that price is at Rs 214 at 11:15 in which case auto square off will earn you a profit of Rs 1000. Well, depends on your luck!!

But then its better to be the master of your own trades and square off your positions on your own. The concept of intraday is same in equity as well and generally brokers have auto square off around 3:15-3:20 PM in equity segement.

Carryforward position: If you select the type of trade as carryforward, then your position will not be auto squared off by the broker and in above example if you have bought 1 lot zincM today and don’t sell by today you will see +1 zincM in your open positions tomorrow. This is similar to delivery based buying in equity wherein the shares will be credited to your demat account and will be available for sell next day.

 

An important point to note here is that unlike shares, commodities are future contracts and if any position intraday or carryforward is open till the time of expiry of contract, it will be squared off by the broker (Ofcourse you can take delivery of 100 shares of GAIL but cannot take delivery of 1 lot of Natural gas)/ Commodity trade is just a speculation and normal traders like us are obviously not interested in taking delivery of commodities. There maybe some copper or zinc traders who are dealers of these metals and they may take delivery or give delivery to MCX as per the contract specifications of MCX. 

Do let me know of this was helpful to you in the comments below. Also check out my article on Equity vs commodity trading https://indianinvestor.blog/2017/03/04/equity-futures-vs-commodity-trading.

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