8 Things to Know About Currency Trading in India

These days, everyone has more or less knowledge of stocks and equity trading. But many people are not aware of a high potential market. Currency trading is an act of assuming the relative value of one country’s currency versus that of another country.

If you can identify the right opportunity and use them properly, currency trading would give you more chances of gaining profits. You should understand the basics of currency market trading for reaping all the benefits of currency trading.

When it comes to currency trading, one must know about online forex trading. It is a simultaneous act of purchasing a currency and selling another. The combination of these two currencies builds a currency pair. All currencies are traded in Paris, and a unique three-letter code presents each currency in a pair.

This article has enlisted eight things you need to know about currency trading in India.

Currency Market

Across the globe, there are two types of currency markets- cash or spot market and futures market. In the Indian market, the second type is the preferred way of trading. It is not like the stock market, where you are allowed to purchase or sell a single stock.

Here, you need to buy one currency and sell another in the forex market simultaneously. Next, almost all the currencies are priced out to the 4th decimal point. A percentage of the point can bring a small increment in trade.

Indian Currency Market

It is visible that the currency future in India will be cash-based. It implies that such currency trading in India is not settled physically. For instance, there is no real delivery of the currency on its expiry.

In India, when someone asks about currency trading, most probably, he/she refers to currency futures trading. Some popular platforms in the Indian market are provided by exchanges, such as NSE, Bombay Stock Exchange or BSE, MCX-SX, etc. You may not need to create a Demat account; you can ask for help from experienced agencies.

Currency Market Basics

Before participating in currency trading, you should remember that the trade happens between a pair of currencies. Currency trading in India allows you to take a position on the currency pair.

For instance, the EUR/USD rate implies the number of US dollar one Euro can purchase. If you believe that the Euro will be increased in value than the US dollar, you can buy Euros with US dollars. When exchange rates rise, you can sell the Euros and cash it in your profit.

Working of Currency Market

The currency or online forex trading market is known as a decentralized market across the globe. Nowadays, it has become the largest financial market. It has an average of $5 trillion. A large currency trade engages the US dollar as one of the currencies in the currency pair.

Things Needed for Starting Currency Trading 

First, create a currency trading account with a trusted broker and follow the Customer KYC norms. Next, you need to deposit the required money. After this step, you will receive credentials with which you can start your currency trading.

Things to Remember while Trading in Currency Market

If you want to ensure success in currency trading, you need to understand the basics, your goals, and risk management right. Check out a few tips:

• Develop a proper understanding of your trading style– You should choose an apt and trusted trading style. However, the style is aligned with the risk profile of the trader.
• You need to choose the right platform- Always remember that you need to pick the right platform. Hiring a broker experienced in trading is aligned to the risk profile of the trader.

Risks Associated with Currency Trading

You can follow the steps that can help you start currency trading:

To create a currency trading account you will need to open a currency trading account with the help of a well-known agent or company that does not charge opening fees.

8. Always be careful

While trading currency, you must always be active and careful. Keeping an eye on the current currency market will be a wise decision.

Before you buy and sell a currency, don’t forget to consider these eight things.