Equity and commodity trading are one of the most common trades in the stock market. Of course, each trade comes with its perks. But one question that always confuses investors is whether one can directly transfer funds from an equity to a commodity account or vice versa. In this article, we’d try to find the answer to this question.
To begin, let’s understand what is equity and commodity in detail.
Equity is a common stock/part of a share of a company’s overall valuation. Therefore, anyone can buy it from the share market. However, it depends on the company as to how many of its shares are available for the stock market purchase.
The commodity is a raw material or a contract. You can either take physical delivery of a product or can have a cash transaction of the difference between buying and selling in your cash account in commodity transactions.
Major differences between commodity and equity
- Shareholding – An equity shareholder is a shareholder of the company. The number of shares can vary from one to thousands. A commodity holder is just a holder of a contract of the underlying asset. This contract has a fixed price and expires after a particular time.
- Ownership – Ownership can only be seen in equity. Commodity does not offer any kind of ownership in the company.
- Volatility – The volatility of your stocks depends on the stock market. But if one set to compare commodities and equity, equity is comparatively less volatile. The commodity is attached to global factors. Thus, the risk is also higher because of a higher volatility factor in commodities. You may choose your stock market investment according to your risk appetite.
So, now that we know the difference between commodity and equity, let’s look at a very important question, i.e. whether you can transfer your funds directly from commodity to equity or vice-versa.
Is there any Alternative to this?
So, how to transfer funds if this can’t happen directly?
If you want your funds to be transferred from one segment to another, you first need to withdraw them. Once you withdraw your funds and transfer them to your bank account, you can transfer the amount to your desired segment.
Equity and commodity are two different types of trading, and their funds are non-transferable to each other’s accounts directly.
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