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EDUCATION

Understand the Market Before You Trade.

Commodity futures trading involves more than anticipating price movements. Understanding contracts, market mechanics, margin requirements and risk is an essential part of informed participation.

Explore the fundamentals of PMEX trading, learn the terminology used in futures markets, and build a clearer understanding of the responsibilities that come with trading.

How PMEX Trading Works Explore Markets

Start With the Fundamentals.

If you are new to commodity futures, begin with the basic concepts. Understanding how a contract works, what determines its value, and how margin affects your trading account provides a stronger foundation for learning about individual markets.

01

Introduction to Commodity Futures

Commodity futures are contracts whose value is linked to an underlying commodity or other specified market reference. Depending on the contract, the terms may specify the contract size, quotation method, expiry, settlement method and other conditions.

Futures prices can change rapidly in response to supply and demand, economic data, currency movements, interest rates, geopolitical developments and other market factors.

Learn what futures contracts represent, how they differ from simply purchasing a physical commodity, and why their specifications matter.

Learn How Futures Trading Works
02

Understanding PMEX

The Pakistan Mercantile Exchange (PMEX) provides an organised exchange environment for futures trading in Pakistan. Trading takes place under the applicable exchange rules and regulatory framework.

Understanding the roles of the exchange, broker, trading platform and clearing and settlement arrangements helps explain how orders and positions are handled.

Learn how the PMEX trading process works, how to access listed contracts through a registered broker, and where to find official exchange information.

Explore the PMEX Trading Process
03

Understanding Contract Specifications

Every futures contract has its own specifications. These may include the contract size, minimum price fluctuation (tick size), quotation currency, trading hours, expiry date, margin requirements and settlement method.

These details determine how a price movement translates into a gain or loss and what obligations may arise as a contract approaches expiry.

Before trading any contract, review its current specifications and confirm that you understand the associated costs and risks.

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04

Trading Terminology

Learning standard trading terminology makes it easier to understand market activity and communicate clearly. Start with terms such as:

Long
A position that generally benefits from an increase in the contract price.
Short
A position that generally benefits from a decrease in the contract price.
Margin
Funds or other eligible collateral required under applicable exchange rules to support a futures position.
View the Full Glossary

Market Terminology

The Full Trading Glossary.

A clear definition of the standard terms used across this site and in commodity futures. These definitions are introductory, and contract-specific rules and exchange terminology take precedence where applicable.

Long
A position that generally benefits from an increase in the contract price.
Short
A position that generally benefits from a decrease in the contract price.
Contract size
The quantity or exposure represented by one contract.
Tick size
The minimum permitted price increment for a contract.
Expiry
The date on which a contract reaches the end of its trading life under the applicable rules.
Settlement
The process through which contractual obligations are completed under the contract's terms.
Open position
A futures position that has not yet been closed or otherwise settled.
Margin
Funds or other eligible collateral required under applicable exchange rules to support a futures position.

Understand the Risks Before Taking a Position.

Futures trading involves financial risk. Market movements can be rapid, and the use of margin can magnify the effect of price changes relative to the funds committed to a position.

Understanding the mechanics of a trade is only part of the preparation required. You should also understand the potential loss, the funds required to maintain a position, and the conditions under which a position may need to be reduced or closed.

01

Margin Requirements

Margin is not the purchase price of the underlying commodity. It is the amount required under applicable rules to support a futures position.

Initial margin, maintenance requirements and additional margin obligations may apply according to the contract and exchange rules in force. Requirements can change, and an account may need additional funds when market movements affect its margin position.

Understand the applicable requirements before entering a trade and monitor your account throughout the life of an open position.

02

Leverage and Exposure

Leverage allows a position's notional exposure to exceed the margin initially committed. Consequently, a relatively small movement in the underlying contract price may result in a substantial gain or loss relative to the margin amount.

Do not assess a trade solely by looking at the required margin. Consider the full contract exposure, the potential effect of adverse price movements, transaction costs and the financial consequences of a loss.

03

Risk Management

Risk management begins before a trade is placed.

Consider your financial circumstances, trading experience, available funds and ability to absorb losses. Understand the contract, define the conditions under which you would exit a position, and avoid concentrating exposure beyond your capacity to manage it.

Do not rely on guaranteed-return claims, borrowed funds you cannot afford to lose, or unverified trading recommendations. No risk-management method can eliminate market risk.

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Preparation Before Participation.

A structured preparation process helps you approach the market with a clearer understanding of the decisions and responsibilities involved.

  1. Understand the Contract

    Read the relevant contract specifications, including size, quotation, tick value, expiry and settlement arrangements.

  2. Review the Margin

    Confirm the current margin requirements and understand what may happen if your account no longer meets applicable requirements.

  3. Calculate Potential Exposure

    Understand how a price movement affects your position and estimate the financial impact of adverse as well as favourable movements.

  4. Understand the Costs

    Review applicable brokerage commission, exchange charges, taxes and other transaction-related costs. Confirm the current charges with Titan Capital before trading.

  5. Understand Your Platform

    Learn how to place, modify and close orders, monitor open positions, and review account balances and trade records.

  6. Make an Informed Decision

    Trade only when you understand the relevant contract, its risks and the financial exposure involved. Participation is not suitable for everyone.

Continue Learning.

Develop your understanding through official exchange resources and Titan Capital's educational material. Start with the fundamentals and consult the applicable contract documentation before making trading decisions.

  • How PMEX Trading Works

    Learn about the exchange, brokerage relationship and general process involved in accessing commodity futures markets.

    Explore the Trading Process

  • Explore Available Markets

    Review commodity categories and explore the listed contracts available through the exchange, subject to current listings and applicable specifications.

    Explore Markets

  • Understand Trading Accounts

    Learn about the available account types, account-opening requirements and the steps involved in becoming a client.

    Explore Accounts

  • Official PMEX Investor Education

    Access exchange-issued guides, webinars and other educational materials published by PMEX for investors.

    Visit PMEX Investor Education

Common Questions.

What is commodity futures trading?

Commodity futures trading involves buying or selling futures contracts linked to an underlying commodity or specified market reference. A contract's value changes as its price changes, and the outcome depends on the position, entry and exit prices, contract specifications and applicable costs.

Is futures trading suitable for everyone?

No. Futures trading carries significant risk and may not be appropriate for every individual. Consider your experience, financial position, objectives and ability to withstand losses before participating.

What is the difference between margin and the value of a contract?

Margin is the amount required to support a position under the applicable rules. It is not necessarily equal to the position's full notional exposure or the maximum possible loss. Losses may be substantial, and additional funds may be required depending on the contract and applicable rules.

Can I guarantee a profit by following a trading strategy?

No. No trading strategy can guarantee profits. Market prices are affected by multiple factors, and a strategy that performs well under one set of conditions may perform poorly under another.

Where can I find contract specifications and current margin requirements?

Consult the official PMEX contract information, applicable exchange notices and current requirements for the relevant contract. You may also contact Titan Capital for assistance in locating the relevant information. Margin figures and contract terms can change over time, so always confirm the current details before trading.

What should I learn before opening a trading account?

Begin with the fundamentals of futures contracts, order execution, contract specifications, margin, costs and risk management. Review the applicable account-opening requirements and all relevant risk disclosures before proceeding.

Does Titan Capital provide guaranteed trading returns?

No. Titan Capital does not promise guaranteed profits or risk-free trading. Clients should make independent, informed decisions after understanding the risks associated with futures contracts.

YOUR NEXT STEP

Knowledge Comes Before Execution.

A clear understanding of the market, the contract and the risks involved is an important starting point for informed participation in commodity futures trading.

Choose your next step based on what you want to learn.

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Educational Information

The content on this page is provided for general educational and informational purposes only. It does not constitute investment advice, a recommendation to buy or sell any futures contract, or a guarantee of future results. Commodity futures trading involves substantial risk of loss and may not be suitable for every investor. Contract specifications, margin requirements, exchange rules and applicable charges may change. Consult current official documentation and applicable risk disclosures before trading.