What is currency trading?
Trade is simple to understand you buy a product at X prize and sell it at X +y amount to make y amount of profit. This is the terminology used everywhere. Here you are buying money. Whenever you buy say USD $ you are buying a “share” in American economy. You are betting that American economy is going good and as you sell those “shares” back to the market you will make a good profit. Currencies are traded in pair i.e. simultaneous buying of one currency and selling of another. In india currencies are traded through broker & traded in pair example USD and INR (USD/INR). In this example you will buy USD and sell the INR.
What are the factors that affect the exchange rate of a currency?
Exchange rates are changed be seconds, following are the dynamics affect them
– Supply and demand for the country’s currency in the international forex market.
– Interest rates
– Employment level
– Trade balance (is the total value of its exports, minus the total value of its imports)
– Central Bank Actions
– Political factors
– Trader’s psychology
How and why does the demand and supply of a currency increase and decrease?
There are several reasons. A rise in export earnings of a country increases foreign exchange supply. A rise in imports increases demand. These are the objective reasons, but there are many subjective reasons too. Some of the subjective reasons are: directional viewpoints of market participants, expectations of national economic performance, confidence in a country’s economy and so on.
How can one trade into currencies?
Spot Market – Currencies are traded on the spot i.e. immediately.
Futures – Contracts to buy or sell asset at specified prize on a future time (date), transparent and well regulated.
Exchange-traded Funds – Set of stocks combined with currencies allowing end customer to take advantage of diversification.
What is a currency futures contract?
A currency futures contract is a standardized version of a forward contract that is traded on a regulated exchange. It is an agreement to buy or sell a specified quantity of an underlying currency on a specified date in future at a specified rate (e.g., USD 1 = INR 46.00). (Note: USD is abbreviation for the US Dollar, and INR for the Indian Rupee).
Who can trade in this market?
– For Indian market, requirements are
– Those who satisfies above criteria can trade into this market.
How to Start with trading?
– You have to start with currency account similar to dmat account.
– Once you opened currency account, then you can start trading on line and off line.
Is the returns are guaranteed?
– As discussed it is Forex business. Business in currency trading.
– There is no such business present in the world which will give you only profit and only profit.
– But the advantage of forex trading is that you can control your loss, if you learn to control your loss then automatically your profit is increased. In simple terms loss is there but we can control the loss.
– If it can’t be avoided but we can minimize it. If you learn this you can get benefit of compounding interest of Money.
– You will become financial free & feel the leverage income.
I want good amount of money but I don’t have enough time?
– There are two options available, SMS phone calling trading
– Trading on behalf of you.
Here someone else taking risk on your money. They will work for you with minimum risk returns expected are from 5% – 8% on per month basis.