What is Currency Trading? Things You Should Know

Posted by Dilkash Shaikh on

What is currency trading? Things you should know


Everyone knows about stocks and equity trading. But only a few people know about the high-potential market, this avenue is called currency trading. It allows traders to deal with foreign currencies and it gives you an opportunity to earn a profit if you are able to hit the right spot. The international currency market involves participants from around the globe. They trade different currencies. The participants of currency trading comprise banks, corporations, central banks, investment firms, retail forex brokers, and individual investors. Now let's look at the facts you should know about currency trading.

Currency Market Futures

The currency market, also known as the foreign exchange market (forex market) helps traders to take a position on different currencies. Traders  around the globe use currency futures contracts for trades. In currency futures, a trader  can buy or sell a currency at a future date, at a previously fixed price.

Indian Currency Market

In India, currency futures are cash-settled. This means such currency trading in India is not physically settled and there is no actual delivery of the currency on expiry. Currency futures are traded on platforms such as Bombay Stock Exchange (BSE) and MSEI . Here, currency trading is usually conducted from 9 am to 5PM for the 4 Rupee pairs and till 7.30 pm for the other 3 crosses You need to open a Currency trading account to do trading in the currency market.

Types of Currency Market

Mainly, there are two types of currency markets. The first one is the  spot market. The second one is the futures market where currency futures are traded worldwide. In India, the futures market is highly preferred by traders.

How to Start Currency Trading?

The currency trading market is growing in India so it is the right time to enter this market. Firstly, you should open a currency trading account from a reputed broker. Follow the customer KYC (Know Your Customer) norms and deposit the margin amount. Get your account's credentials from your broker and begin!

How does the Currency Market work?

Today, the currency market is the world's largest financial market and has an average turnover of about $5 trillion. US dollar currencies are used widely in the currency pair. In Indian exchanges, there are  futures & options on 7 currency pairs (USD-INR, EUR-INR, GBP-INR, JPY-INR, EUR-USD, GBP-USD, and USD-JPY). Demand and supply make the currency market work.

How does the Currency Market work?

Forex trading involves a high risk of loss. So, when you do currency market trading, limit your risks by never doing trade based on borrowed funds and never stretch yourself.