Online Share Trading

Forex Trading

What's Forex trading?

Forex trading is also known as Currency trading or FX trading. It involves buying and selling international currency pairs. Forex trading is a way to trade currencies in the hope that prices will change. The currency purchased will appreciate in value with the one that is sold.

The Forex market is the world's largest financial market. It houses corporates, investors, and speculators. Forex markets operate electronically, not through physical locations, unlike other financial markets. They trade one currency for the next using an electronic network made up of banks, corporations and individuals. Forex markets can operate 24/7 across time zones and financial centers for five days a week, making it easy for them to be open for business.

Forex: How to Make Money

Forex markets are one of the most liquid markets, offering easy access 24 hours a day and low costs. Many currency traders make quick entry to the market and then quickly exit when they experience setbacks. These are some tips for traders and investors to help them keep up with the market and make money in Forex.

Forex Trading Basics

Forex trading basics include understanding the terminology and adjusting to the economic, geo-political factors that affect the currencies being traded. It is crucial to be well-informed about the terms used in forex trading.

  • Currency pairs : Currencies can always be traded in pairs such as USD/GBP or JPY/INR. There are three types of currency pairs
  1. Major pairs that always involve USD (US Dollar), i.e. USD/EUR, US/INR etc.
  2. Although they do not involve USD, minor pairs can be compared to major currencies, such as JPY/EUR and EUR/GBP.
  3. Exotic pairs consisting of one major currency and one currency such as USD/HKD (US dollar/Hong Kong dollars)
  • Point in Price (Point in price): A PIP refers to a difference between the currencies of the pair. If the USD/INR rate today is 74.7001 and yesterday was 74.7002, then the PIP would be.0001.
  • Base Currency and Quote Currency . The currency listed on the left side if a currency pair has '/' is the base currency, while the currency on the right is the counter or quote currency.

Base currency is the reference element. It has a value 1 and indicates how much quote currency is required to purchase a unit of base currency. If you buy EUR/USD, you are purchasing the base currency and selling the quote currency.

A trader would BUY a pair if he/she believes the base currency will appreciate relative to the quoted currency. Contrarily, a trader would SELL if the base currency will decline with the quote currency.

  • Ask Price and Bid Price : Base currency prices are the Bid Price and Ask Price.

If USD/INR is quoted at 75.7260/75.7240 then the Bid Price to Buy 1 USD would be Rs. 75.7240, and Rs. 75.7260

  • Spread - It is the difference in the Ask Price and the Bid Price.
  • Lots Currency trading can be done in lots. There are three types of lot sizes available, depending on the unit: Micro (1K units), Standard (1 lakh) and Mini (10K units).

These terms are not the only ones that apply to forex trading. It is important to remember that research and study of foreign markets is always in progress. The traders must be ready to adjust to changes in market conditions and other world events. A solid trading plan that examines and evaluates investment options according to risk appetite and investment objectives is a good way to make money forex trading.

Find the Best Forex Broker

You should ensure that the broker adheres to the regulatory framework in place that protects the integrity and integrity of forex markets. There is a high chance that investors will fall for fraudsters who claim to be experts in online Forex trading. Past events have shown this. There have been many instances when traders shut down operations after increasing transaction costs and investors start losing money. Beware of fraudsters who use manipulative or abusive tactics.

You may be pleasantly surprised to find that there are many people who have had positive experiences with a brokerage or trading platform. Make sure you are getting the best currency pairs and that you get a fair commission.

Start with a Demo/Practice account

Many major trading platforms provide a practice platform that allows you to try trading without having to spend any money. You should take advantage of this platform to save money as you learn. You can learn from your mistakes during practice trading so you don't make them again in real-life.

Start With Small Investments

After enough practice forex trading, it is a good idea to start small. It is possible to lose your money if you invest a large amount of money in your first trade. It is a good idea to invest in small amounts first, and then increase the amount over time.

Keep a Record

Keep track of your trade successes and failures in a journal for future reference. You will be able to recall past mistakes and avoid making them again.

Forex Trading in India

SEBI regulates the Indian Forex market and follows the "Forex Trading in India RBI Guidelines". According to RBI's Liberalized Remittance Scheme, individuals are not allowed to use foreign money for speculation purposes or provide margin money. For retail investors, forex trading is prohibited in India. Currency trading in India is allowed on the National Stock Exchange, the Bombay Stock Exchange and the Metropolitan Stock Exchange of India Ltd.

Forex trading is very limited in India, compared to developed markets. You can trade only four currencies: the Euro (EUR), US Dollars (USD), Great Britain Pounds (GBP) and Japanese Yens (JPY). An investor can open a trading account with either a SEBI-registered broker or via SEBI-authorized platforms that allow forex trading online.

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