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What do you mean by currency trading and what is the system of currency trading in India?

Nov 4th 2015 at 2:05 AM

The act of purchasing and selling the international currency is termed as the currency trading. In India several banks and financial institutions are involved in currency trading. There are also individual investors who are indulged in currency trading and wish to benefit from the variations in the exchange rate. The forex currency trading market is the largest market and the daily turnover is around 2.5 million dollars. It is the electronic trading platform which links the currency traders, right from the banks to the traders across. Any resident of India or the financial institutions and the banks can indulge in the currency trading. You can trade the currency even on the international level and there are different types of currency mainly you can trade including EURINR, USDINR, GBPIRR, JPYINR and many more. Currency trading exchange in India can be done on both short term and the long term. If you anticipate any downturn in the prices, you can opt for the short position. You can benefit from a decline this way.

What is margin and how can you benefit?

The performance bond which insures or protects one against the trading losses is known as the margins. You can also hold positions which are much larger than your original asset value. The Capital management system of the Forex permits the calculation of cash on hand which covers the present necessary position. If fund falls below the need or the margin requirements, all the open position will be closed. This way, the account will be prevented from falling below the available equity.

What are the exchange rates used?

Some of the commonly used exchange rates on the national level incorporate the NSE or the National Stock Exchange and the Multi Commodity Exchange. COMEX, the commonly used exchange is the regulator of the market. The currency market in India is regulated by the SEBI or the Securities and Exchange Board of India and the RBI.

How are currency prices in India determined?

Currency prices in India are influenced by several economical and the political factors. Some of the most crucial factors include the international trade, interest and the inflation rate. Even the Government can participate in the Forex market to alter the value of the currency. This can be done easily by flooding the market with the domestic currency in order to lower the prices of the currency. It can even buy the currency to increase the prices.

Currency trading through the derivatives

If needed, you may even buy the contract to trade the particular amount of currency in India. You can place your orders to trade in the currency derivatives. It can offer a series of benefits like hedging, price speculations, arbitration and leveraging.

Author Resource:- The Author is a professional writer, presently writing for currency derivative trading.

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