How to do Forex Trading in India?
Trading in foreign currency is called forex currency trading. It's likely you have noticed that the value for the dollar is certainly going up each and every day. Dollar exchange rate was Rs. 62 before few days and now it is Rs.64. Investors prepared to benefit from this appreciation in a nutshell and medium term can participate in forex trading.
Yes, it really is legally allowed to trade Forex within Indian Exchanges like BSE, NSE, MCX-SX. As per RBI guideline, all Indian resident including banks and banking institutions can perform forex trading in currency pairs. The main currency pairs are USDINR, EURINR, GBPINR and JPYINR. So, if you're trading with brokers that have membership in mention exchange it really is absolutely legal.
How Forex Trading Works?
Forex currency trading is same as compared to equity trading. In equity trading rate of share matters whilst in currency trading exchange rate matters. You can get or sell currency pair according to your expectation of movement in currencies. Please relate to the example listed below for better understanding.
- Suppose you want to make use of growing cost of a dollar. The dollar is trading at Rs 64, you feel that price is going to appreciate and likely to reach at Rs 67 in few months you can easily enter into a long position by purchasing USDINR contract on the exchange. If the price would go to Rs 67, you will get the profit of Rs.3 per dollar. So within the single contract of 1000$ you can earn Rs.3000.
- After stepping into the contract in the event that you see that Rupee is appreciating and dollar pricing is expected at Rs 63, you can ‘short close’ your role by selling currency future contract. If dollar price would go to Rs 63 you are able to gain Rs 1 per dollar by squaring off your situation. Total gain on a 1000$ contract is going to be Rs.1000. However, if a buck moves up and reach Rs 67, you lose Rs 2 per dollar. An investor can square off position anytime throughout the period of the contract.
- You can take similar long and short position in EURINR, GBPINR or JYPINR.
Brokers for Forex Trading
Currency trading can be done with register Indian brokers. Most frequently used exchanges are MCX-SX – Multi Commodity Exchange and NSE – National Stock Exchange. In the international level exchange, COMEX is employed as regulators. The currency marketplace is regulated by RBI and SEBI. Best Brokers offering forex currency trading services in India are –
Forex Trading or Currency Trading is Risky and not for everybody
Trading in forex carries a high standard of risk and it may well not suits everyone. Before carefully deciding to complete forex you should look at your investment objectives, risk carrying capacity and degree of experience.