Foreign Exchange markets give continuous price quotes to Investors. This allows Investors to trade Indian Rupees INR in exchange for many major foreign currencies, such as US Dollars(USD), Euros(EUR), British Pounds (GBP) etc. Further, it enables them to exchange any of these foreign currencies against one-another (eg. USD vs EUR). This is the right time for retail investors, who have the power to tap the Foreign Currency market directly, to unlock its profit potential, in a protected environment via currency trading.
What is the Foreign Exchange
(FOREX) Market?
When you trade in Forex, you are trading in the world’s largest financial market. You will be rubbing shoulders with a variety of members or participants such as:
Banks and Financial Institutions
Exporters and Importers
Central Banks of Countries
Speculators
Such a huge number of participants increase the depth of the market, by their active presence ensuring liquidity. This is a continuous 24 hour market which never sleeps, beginning the trading day in Asia, followed by Europe and then the Ameicas. Unlike the Share or Commodity markets, a predominant portion of trade in the Forex market is carried out ‘Over-The-Counter’ and not via Exchanges such as BSE or NSE. Not all foreign currencies are traded liberally against the Indian Rupee. Many countries impose varying levels of control, to ensure that their home currencies remain stable and not volatile.
Benefits of Currency Trading
Unlike stock or commodities markets, the 24 hour nature of Forex markets make it flexible and attractive. The same currency pair could be bought or sold in various time-zones within the trading day, making it a very flexible market and a liquid one.
Currencies can be traded for current date settlement Cash, Tom or Spot or for a future date Forwards. It can even be ‘swapped’ between dates Buy today and Sell 1 month later, paying/receiving interest costs. Currency derivatives are also available for trading via exchanges.
Major Currencies give investors good scope to trade intraday, overnights as well as in the short and medium terms, depending on his risk appetite.
Major Currencies give investors good scope to trade intraday, overnights as well as in the short and medium terms, depending on his risk appetite.
It carries lower transaction costs as direct access removes the ‘price-setting’ done by banks. Banks charge pre-agreed, flat fees which are transparent.
Forex markets give the benefit of leverage to investors. This is the capacity to trade large amounts or take large exposures, with smaller down payments or margin requirements.
Frequenlty asked questions
What are the Rules for Trading by Investors on Electronic Trading Platforms (ETPs)?
How to Make Profits Using Forex Trading?
Are there Currency Derivatives in India ?
