Forex futures trading is more lucrative than ever before. The Forex trading market began as an over-the-counter financial vehicle for large
banks, financial institutions and large international companies to hedge
against foreign currency exposure.
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| Forex Futures trading in India - Generatebucks |
With easy access of real time financial data,
and Forex trading software available to most investors through the internet, today's Forex market includes an increasingly large number of individuals and corporations
who are speculating or hedging foreign currency exposure by phone or any
registered online Forex trading platforms. Forex futures trading has become an
alternative investment vehicle for many traders and investors.
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You might have heard tales of individuals who had
their lives changed after joining the Forex futures trading marketplace. Yes! Every
investor has a chance to earn but what is generally not said is that with it
comes a big risk. Forex futures are very volatile just like the Forex spot
market. You stand a chance of losing everything you own based on trading strategies,
if any. So before dipping your toe in it, it is essential to become
knowledgeable about everything in this market.
As an investment tool, Forex trading provides both
large and small investors with higher flexibility when determining the
appropriate Forex trading and hedging strategies to implement. In India, most Forex trading is conducted through registered brokers.
Forex futures trading in India
Forex futures trading in India is termed as FX future. It is
a contract to exchange one currency for another at a specified date in the
future at a price (exchange rate) that is fixed on the purchase date. Forex
futures trading in India are regulated under NSE and MCX. Looking at volumes on
both exchanges, I would recommend selecting NSE. It definitely is better in
terms of volume and possibly volatility when it comes to future trading.
Things to know before you start trading
Currency Pairs
FX futures are traded in currency pairs. Among the crucial
stages in learning to trade Forex is to understand about the currency pairs. Currency
pairs are majorly categorized into major, minor and exotic pairs. Major
currency pairs are those which contain the USD and the currency - New Zealand
dollar, Japanese yen, GBP, Swiss Franc, Canadian Dollar, Australian Dollar,
along with the euro.
In India we trade in exotic pairs which are one major
currency paired with the currency of an emerging economy. In a pair, first is
the base currency while the next one is called the quote money. You purchase or
sell the base currency in exchange, when trading. As an example let us pick-up
the most traded Forex Future contract USD INR May contract. In this USD will be
base currency and INR will be the quote currency.
Glancing the Forex futures trading markets in India
regulated by NSE and MCX, an investor could trade four currencies vs rupee. Currently
traded currencies are USD, Japanese Yen, Euro and Pound.
To understand how this really works we can pick a recent
contract USD INR which has been trading at 69.71. Now if a trader believes that
Indian Rupee will get strong, he/she will create a short position in USD INR
contract and if a trader believes that dollar might get strong than he will
have to create a buy position in this contract. It works similar to the future
markets but trader would have to speculate based on USD.
Find a Reliable Broker
Forex futures trading would be full of risks as mentioned
before. So before you start investing big money, you need some kind of
protection in the shape of a broker. A good broker will facilitate you into
things giving time to practice. Ask around particularly in active forex forums
to find reliable brokerage companies. If you are confused, I could connect you
to few brokers whom we trust and you can choose among them.
Do your homework
We always suggest to read and do detailed analysis of
historic data and global trends before you invest in FX future. It could be
great if you can arrange for a demo account for practicing currency trading.
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| Forex futures trading |
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| Forex futures trading |
Remember these market are extremely volatile and very risky and you might land
up losing everything if you do not follow a strategy properly. There are research agencies
who share regular information about trends in FX futures market but ultimately,
it is your hard earned money on stake, SO BE CAREFUL.
Read our disclaimer before investing
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