Forex Exposure
How Forex Trading in India – Learn the basics of Foreign Exchange (Forex) Trading
How To Forex Trading in India
What is Forex?
Forex / Currency trading is the trading in the currencies of various countries in order to make profits. Currencies are always traded in pairs which means it can operate in two currencies simultaneously. You buy one currency and selling another currency. The most traded currency pairs are USD / JPY GBP / USD and EURO / USD. The first currency in the pair is termed as the base currency. Buying GBP / USD means you are buying and selling GBP USD. Likewise sale EURO / USD means you are selling and buying USD EURO.
How to trade currency / foreign exchange
Much money can be made by trading currency. The reason is the margin money requirement (minimum deposit) is only 5% of total trade. For example – If you have Rs 1000 in your account, you can take positions at Rs 20,000 (1000 * 100 / 5). This means that a person can take a big position in the market with a small amount. Let us understand this concept with an example – If you want to trade in pounds and have a capital of 75,000 rupees. href = "http://funeasyforex.blogspot.com/?tid=articlebase160610"> How Forex Trading in India
If 1 pound = 75 rupees
Lot size is 1000
The total exposure = 75 000 * 100 / 5 = 14 rupees, 80,000
Case 1 – If the rupee depreciates by R 1, R 1 pound = 76
Merchant incurring a loss of Rs 1000 * 10 = Rs 10,000
Case 1 – If the rupee appreciates by R 1, R 1 pound = 74
Operator incurring a profit of R 1000 * 10 = Rs 10,000
With increase or decrease in the currency of a either make money or lose money. Operators should always note there is huge potential of money to be made and the risk is quite high as well. Investing in currency futures is based on the risk appetite. Ideally, a small investor should not have exposure to such instruments.
Forex Trading in India
Currently, derivatives products (futures and options) are only available in four major currencies – Dollar, Euro, Pound and the Yen. These are offered by National Stock Exchange and the exchange of several commodities exchange.
Resignation
Forex is an instrument of very high risk / high financial reward. The trade in foreign currency should be traded only with risk capital. Remember not secure profits in the Forex Market. href = "http://funeasyforex.blogspot.com/?tid=articlebase160610"> How Forex Trading in India
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Foreign Exchange Exposure