Currency Trading – 10 Things To Know in India

When it comes to currency trading, there are a lot of things you need to know in order to be successful. Whether you’re new to the game or you’ve been trading for a while, it’s important to keep up with the latest changes and trends. Here are the things you should know about it in India.

What is the Currency Market?

Participants in the international currency market come from all over the world. They buy and sell various currencies. Currency traders include banks, corporations, central banks (such as the RBI in India), investment management firms, hedge funds, retail forex brokers, and individual investors like you. Forex trading is a legal way to make money.

What Are Currency Market Futures ?

The currency market, also known as the foreign exchange market (forex market), assists investors in taking positions on various currencies. Currency futures contracts are used for trades by investors all over the world.

Currency futures allow investors to buy or sell a currency at a predetermined price at a future date.

What Is the Indian Currency Market ?

Currency futures in India are settled in cash. This means that currency trading in India is not physically settled, which means that there is no actual delivery of the currency at expiry. You are most likely referring to currency futures trading when you ask what currency trading means.

Currency futures are traded on platforms provided by exchanges such as the NSE, BSE, and MCX-SX. Currency trading typically takes place between 9:00 a.m. and 5:00 p.m. To trade in the live currency market, you must first open a forex trading account with a broker. It is possible that you will not need to open a demat account.

Types of Currency Market

There are two types of currency markets all over the world.

  1. The first is the spot market, also known as the cash market.
  2. The second is the futures market, which trades currency futures. Futures are the preferred method of trading in the Indian currency market.

What Are The Basics Of Currency Trading

The first thing to remember is that currency trading is always done between two currencies. In contrast to the equity or stock market, where you buy a share of a single company, currency trading in India entails taking a position on a currency pair.

For example, the EUR/USD rate represents how many US dollars one Euro can buy. You buy Euros with US dollars if you believe the Euro will rise in value against the US dollar. When the exchange rate rises, you sell the Euros and pocket the profit.

10 Things To Know About Currency Trading in India
10 Things To Know About Currency Trading in India

Things Required To Start Currency Trading

To begin currency trading in India, follow the steps below. The currency market in India is expanding, and now may be the time to seize your rightful place in this market.

  • Open a currency trading account with a reputable broker.
  • Follow the Customer KYC (Know Your Customer) guidelines.
  • Make the required margin deposit.
  • To begin, obtain the necessary access credentials from your broker.

How does the Currency Market Work ?

The currency or forex market is a global, decentralised market. It is now the world’s largest financial market, with an average daily volume of approximately $5 trillion. A large currency trade involves the US dollar as one of the currency pairs.

Currency derivatives trading is available on Indian exchanges for derivative instruments such as currency futures on four pairs, cross-currency futures and options on three currency pairs (EUR-USD, GBP-USD, and USD-JPY). The currency market operates on the basis of supply and demand.

Which Things To Remember While Trading in the Currency Market ?

To be a successful currency trader, you must first master the fundamentals, goals, and risk management. Here is a list of things to keep in mind:

  • Recognize your trading style – Every currency trader has a unique trading style. This corresponds to the trader’s risk tolerance. Before engaging in regular trading, you should thoroughly understand yourself.
  • Choose the right broker and platform – A good broker is essential for success in currency trading. When it comes to forex trading in India, a good broker will hold your hand and keep you up to date on live currency market news.
  • Understand your limitations – Before engaging in any currency trade, specify the trade’s entry and exit points. No trade is a sure thing, so be prepared to double down or exit if the situation becomes unfavourable. A good understanding of potential trade scenarios will be extremely beneficial. Keep your losses to a minimum.

What Are The Risks Involved In Currency Trading

Please remember that forex trading carries a high risk of loss. There are more variables when dealing with a currency pair. However, risks are inherent in any financial transaction or investment.

Limit your risks in currency market trading by never trading with borrowed funds and never overextending yourself. These are the only two significant risks.

As with any form of trading, there will be days when you have more winning trades and days when you lose more. Learn from your mistakes and apply what you’ve learned to your future success. Keeping a notebook about your trades is a good way to see where you went wrong.

Famous Currency Traders 

George Soros – In 1992, George Soros rose to international prominence. He is famous for being the trader who broke the Bank of England. Soros earned a $1 billion profit after short selling $10 billion in British pound sterling (GBP).

Andrew Krieger – Andrew Krieger rose to prominence as a successful trader at Banker’s Trust, which rewarded him by increasing his capital limit to $700 million, up from the standard $50 million limit. He profited greatly from the October 19, 1987 crash, also known as Black Monday. He also profited from trading the New Zealand Dollar.

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