Currency Trading in India A Detailed Beginners Guide

1. Currency Trading in India: A Detailed Beginner’s Guide investhub.agency/blog/currency-trading-in-india Posted by Throttll The currency trading, popularly known as Forex trading, is one of the world’s largest financial markets with a daily volume of a whopping $6.6 trillion. Like trading in stocks, Currency Trading in India involves a higher level of risk. As a result, it is quite hard to understand for new traders. If you’re also new to it or want to learn – What is Forex Trading? Read our guide to know everything about it. Before moving further, firstly, we have to understand the basics of currency trading. It is a trade between two currencies. So, forex trading is entirely different from the stock market, where you can trade in a single share. But in currency trading, you must buy one currency and sell another. For instance, the EUR/USD rate shows how many US dollars one Euro can purchase. So you buy Euros with US dollars if you believe the Euro will appreciate versus the US dollar and sell it back when the exchange rate rises, and you cash in your profit. What is Forex Trading? Forex trading can be defined as a network of buyers and sellers who exchange currencies at a predetermined price. It is the process by which people, businesses, and central banks change one currency into another. 1/3

2. Mostly, the foreign exchanges are done in order to make a profit. However, because of the large volume of cash exchanged every day, some currencies’ price changes can be quite volatile. This volatility is what makes forex so appealing to traders: it increases the possibility of large earnings while simultaneously raising the risk factor too. How does Currency Trading in India work? Currency Trading in India is being regulated by SEBI (Securities and Exchange Board of India) and RBI (Reserve Bank of India), which means it is legal. In addition, Currency futures can be traded on renowned exchanges such as the NSE, BSE, and MCX. Currency pairings available for trading in India include: USD/INR EUR/INR JPY/INR GBP/INR EUR/USD GBP/USD USD/JPY To start forex trading in India, the trader must first create an account with the broker. Then, the trader’s job is to forecast how the exchange rate will move. And, if a trader sees signs that the rupee is strengthening versus the dollar, he or she will buy it. If the trader’s prediction goes right and the value of the rupee rises, he or she can sell it to profit. On the other hand, if the dollar’s value increases, it may lead the trader to lose a portion of his or her investment. In the end, the trades are cash-settled and do not require any physical delivery. Currency Trading in India: Understanding the basics To better understand Currency Trading, first, you should be familiar with the few frequently used terms in the Forex market, including: Bid & Ask Pips Spreads Leverage Margin Lot Size What is Bid & Ask in Forex Trading? Forex quotations will always include a bid and ask price. These are critical in terms of the base currency; let’s see how. 2/3

3. Bid: The price at which you want to sell a currency is referred to as a Bid. A market maker often places bids in response to buyer inquiries in a particular currency. Usually, bid prices are lower than Ask prices, but in some cases, they can be higher than Ask prices. Ask: The lowest price at which you want to acquire a currency is known as an ask. For example, if you put an asking price of $1.3891 for GBP, that value represents the lowest price you are ready to pay for a pound in USD. In most cases, the Ask price is more than the bid price. What are Pips in Currency Trading? A “percentage in point” is referred to as a pip. It is the minimum price change in currency markets, equal to four decimal points. For instance, 0.0001 is equivalent to one pip. One dollar is equal to 10,000 pips. The pip value might differ based on the broker’s normal lot size. Each pip will have a value of $10 in a $100,000 standard lot. Because traders use a lot of leverage in the currency market, even the small price changes (measured in pips) can have a significant impact on the trade. What is Spread in Currency Trading? In Forex Trading, the spread is referred to as the difference between the bid and ask price. Suppose, if the bid and ask price for USD/INR is 72.725/72.728, the spread is 0.003 (73.725-73.728). As most brokers are offering commission-free trading, they earn money through spreads. While online brokers are also offering low spreads on trading, their size may get influenced by a variety of factors, including currency demand, market volatility, and the size of your trade. 3/3