The foreign exchange market is the largest market in the world and is meant for exchanging foreign currencies. The forex market is composed of currencies from all over the world and like most financial markets is mainly driven by the forces of supply and demand.
Trading, as we know, allows traders to trade on commodities, equity and other financial instruments to make profits. Forex trading is nothing but currency trading. The volume of currency converted every day tends to make price movements of certain currencies very volatile and this volatility makes forex an attractive proposition for traders. Greater the volatility, the greater the chance of making profits. However, there is an increase in the risk percentage as well. There are certain foreign exchange trading platforms on which foreign exchange trading takes place.
In India, forex trading is regulated by the capital markets regulator, which is the SEBI. It ensures that the firms follow the Foreign Exchange Management Act, 1999. The Reserve Bank of India regulates forex transactions.
No middleman is involved in this kind of trading. If there’s a rise in a certain currency against the domestic one, then one earns an amount that was previously decided upon. If there’s a drop in the currency, one loses the amount that had been bet.
Foreign exchange platforms are banned in India. Even though direct trading in the foreign exchange market cannot happen, currency trading is permitted through the stock exchange. However, it does come with some restrictions. For example, the base currency has to be the Indian Rupee (INR) and the pairs that are allowed are the US dollar, Japanese Yen, British pound, and Euro.
If you wish to trade in forex in India, you have to get in touch with a broker that is spread internationally as the markets operate across locations like the U.S., London, Singapore and Tokyo.
Other than that, you need to open a currency trading account. There is a procedure that needs to be followed in order to proceed with that.
To ease your forex trading, here are a few tips listed which will enable you to make informed decisions and wise choices while investing with foreign exchange.
Different people have different approaches to forex trading. Knowing the market and keeping a tab on the current affairs around the world help in a big way to gain success in a volatile market like forex. Hence, it is important to ensure you are well-equipped before you decide to start forex trading.
Investments in securities market are subject to market risk, read all the related documents carefully before investing
Share this article:
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading