Forex trading in india - Things to Know
Things To Know About Forex Trading in India
Forex Trading in India – Everybody knows about stocks and equity trading. But, there is a high-potential market that most people are not aware of. This avenue is called currency trading. Allowing trades to happen with foreign currencies, gives you a chance to profit if you are able to spot the right opportunity and use them for your benefit. Let us understand the basic concepts of currency market trading so that you can take advantage of currency trading in your quest for wealth creation.
What is Currency Market?
The International currency market involves participants from around the world. They buy and sell different currencies. Currency trading participants comprise banks, corporations, central banks (like RBI in India), investment management firms, hedge funds, retail forex brokers, and investors like you. Forex trading is a legitimate way to make a profit.
What are Currency Market Future?
The currency market, also called the foreign exchange market (forex market) helps investors take positions on different currencies. Investors around the world use currency futures contract for trades.
Currency futures allow investors to buy or sell a currency at a future date, at a previously fixed price.
What Is Indian Currency Market ?
Currency futures in India are cash settled. This means such currency trading in India is not physically settled i.e there is no actual delivery of the currency on expiry. When you ask what is currency trading meaning, you are most probably referring to currency futures trading.
Currency futures are traded on platforms offered by exchanges like the NSE, Bombay Stock Exchange (BSE), MCX-SX. Currency trading usually happens from 9.00 am to 5.00 pm. You need to open a forex trading account with a broker to do trading in the live currency market.
What Are The Types Of Currency Market?
World over, there are two main types of currency market. The first one is the spot market or cash market.
The second one is the futures market where currency futures are traded. In the Indian currency market, futures is the preferred way of doing trades.
What Are The Basics Of Currency Trading?
The first thing to remember is that in currency trading, the trade is always between a pair of currencies. Unlike in equity or stock market where you buy a share of one company, currency trading in India will involve taking a position on a currency pair.
For instance, the EUR/USD rate represents the number of US dollar one Euro can buy. If you think the Euro will increase in value against the US dollar, you buy Euros with US dollars.
When the exchange rate rises, you sell the Euros back, and you cash in your profit.
Which Things Required To Start Currency Trading ?
Take the following steps to begin currency trading in India. Currency market in India is growing and it may be the right time to take your rightful place in this space.
- Open a currency trading account with a reputed broker
- Abide by the Customer KYC (Know Your Customer) norms.
- Deposit the required margin amount.
- Get requisite access credentials from your broker to begin.
How Do Currency Market Works ?
The currency or forex market is a decentralized worldwide market. Today, it is the world’s largest financial market and has an average daily volume of about $5 trillion. A large currency trades involve the US dollar as one of the currencies in the currency pair.
In Indian exchanges, currency derivatives segment provides trading in derivative instruments like currency futures on 4 currency pairs, cross-currency futures & options on 3 currency pairs (EUR-USD, GBP-USD, and USD-JPY). Demand and supply make the currency market work.