When you think about forex trading in India, you immediately think about airport counters for exchange currencies or visit travel firms to get foreign currency notes before flying off to an international holiday.
For many of us, forex trading stops there. But it is much more than just that. Unlike shares and commodities trading, you don’t buy or sell a single currency but exchange currencies, always in a pair.
There is a market for this trading and it’s called the foreign exchange market or the forex market. The market is based online where it runs 24x7x365. That is because this market is a global one and has participants trading all the time. Players in this market range from central and private banks to corporate and individual investors.
Because the players are from all over the world, the market is the most liquid in the whole world. An estimated $4 trillion is traded on a daily basis. While one may think with this much amount of money circulation, volatility may reach gigantic levels. In fact, it is the opposite. With such heavy amounts in circulation; it is difficult for any individual or group or event to influence the market movements unless it is a catastrophic event.
When you trade, you exchange one currency for another. The two currencies in question are called base currency and counter currency respectively. So if you are trading INR against USD; the rupee is the base while the dollar is the counter. The currencies aren’t traded in singles or doubles but in defined lots.
When it comes to forex trading in India or anywhere for the matter, leverage is omnipresent. The broker provides a loan to the investor to trade. The leverage is often 50:1; 100:1, or 200:1 depending on the broker and the size of the trade. However, one needs to open a margin account to make use of leverage.
Forex trading if executed with prudence can direct you to healthy profits. Read up more on it, choose a smart broker, and always trade with your own money.Read more..