| November 20
Detailed information about currency trading basics in India
Currency trading, also known as Forex
Trading, is the most preferred investment option other than the regular salary
income. Investors, who indulge in investing in stocks, bonds and mutual funds,
including currency trading, are witnessing good returns lately. Currently, the
global currency trading is quite bigger compared to other income options,
including stocks. More than the US $4 trillion in currencies are traded every
single day, including the electronic trading platforms.
Before getting into this trading, one
should know that currency prices are not just affected mainly by political and
economic changes, but interest rates, international trading and inflation also
create effects. The market of currency trading in India is in
trillions and allowed within exchanges like BSE, NSE, and MCX-SX under the
guidelines of RBI. Moreover, the main currency pairs are USDINR, EURINR, GBPINR
quick facts about currency trading-
trading in India is done from 9.00 to 5.00 pm at BSE and NSE.
- To do
currency-trading India, you need to connect with professional trading
broker helping you to trade on right share and open account
trade future and options segments in the currency market
Currency Trading in India works?
If you have ever involved in equity
trading, then currency trading will not be that difficult to understand. In the
equity trading, the rate of share matters, whereas in forex trading exchange
rate considered. As an investor, you can buy or sell trading currency pair as
per the expectation of currency movement. To understand more below is the
Suppose, the rate of dollar is increasing
and is trading at Rs 64, and you expect the price to grow at Rs 67 in the next
few months. You can then enter by buying USDINR contract on the exchange. In
case if the price touches Rs 67, then you get the profit of Rs 3 per dollar. So
in the single investment of 1000$, you will earn Rs 3000.
To understand more about how currency
trading works, you must connect with a certified trading broker. This will also
help you to invest in shares or currency with full confidence.
Before you get involved in currency
trading, you must know some terminologies. These terminologies are regularly
used when you trade. Some of the terminologies you must know-
The exchange rate is the price or the
number of units of the specific nation's currency. The exchange rate is what
you need to surrender to acquire one unit of the country currency.
The price at which the currency trades in
the spot market is called Spot Price. If you are trading in USD/INR, then the
spot value is T + 2
SEBI has recognized exchanges having
one-month, two-month and three-month. This can also go to the twelve-month
Final settlement is the date of the last
business day of the month. It is the closing date for each contract.
The contact size depends on the exchange
rate. In USD/INR it is USD 1000; EUR/INR it is EUR 1000.
It is the relationship between future
prices and spot prices. Cost of carrying measures the storage cost plus the
interest rate that is paid to finance or carry the asset until the delivery is
can fall under the trading currency market in India?
Any Indian resident or financial
institutions have full right for currency trading. However, Foreign Institutional
Investors (FII) and Non-Resident Indian (NRI) cannot do the trading.
Trading is not for everyone-
Although forex trading can give you the
best return if done with proper research, there is a huge risk involved. If you
engage with uninformed brokers, you will end up making huge losses. The trading
may not be for everyone. There are certain myths about currency trading in
India which you must be aware of-
- You can make easy money- No, you cannot make easy money. However, it depends on how
strategically you do trading.
- Follow the crowd: In
trading, it is better to make informed decision than to follow the herd.
Only a trader knows where his interest lies and should study the market
before making a decision. At times, the less popular stock may serve your
requirements than the popular or the most traded ones.
trading in India can be rewarding when the right
securities are traded. With proper research and experience the investors and
addressing the misconceptions will help in earning passive income in the