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A forex account is one that holds deposits in one or more currencies for trading. These trades are based on the movement of the foreign exchange market. With this type of account, you can now unlock vast and potentially significant returns from global markets. These and other factors draw investors to forex trading.
Before we discuss the various advantages of a FOREX trading account, let’s understand FOREX trading in detail.
FOREX, the word is a portmanteau, a blend of the words foreign currency and exchange, and self-explanatory. In FOREX, you trade in the currency market, which is the largest market in the world. The daily estimated trading volume is USD 6 trillion, spread over different hotspots around the world and remains active for 24 hours.
FOREX trading is unlike the stock or commodity market. In FOREX, traders trade currency pairs in the direction of the market. Unlike buying stocks, when you trade in currencies, you are simultaneously buying one currency and selling the other. And, you don’t need a DEMAT account for currency trading, as there is no delivery of currency involved. Most trades in the currency market are cash-settled. For online FOREX trading, you only need a currency trading account.
If you are wondering, forex trading can add diversity to your portfolio and let your investment exercise better. The market remains open for 24*7 involves a variety of players from government, banks, institutional investors, travellers, corporations, and amateur traders.
However, the forex market is decentralised. The market operates in different locations like London, Singapore, Tokyo, or New York. To participate in the market abroad, you would need a broker with an international reach.
In India, you can trade in forex derivatives in the BSE and NSE exchanges. However, the market is highly regulated, and trading in non-INR currencies is prohibited under FEMA rules. Before you start trading, go through the rules and guidelines released by the RBI regarding FOREX trading in India, so you don’t end up at the wrong side of the law.
Currencies are always traded in pairs. You can trade in currency derivatives in the Indian bourses. Futures in four currency pairs and F&O in three cross-currency pairs (EUR-USD, GBP-USD, and USD-JPY) are available for trading in the Indian exchanges.
To trade in foreign currencies, you will have to start by opening a currency trading account. Here are the steps involved in that,
Currency trading market is highly dynamic, and the introduction of online forex trading has made it even more agile. FOREX traders are now equipped with highly sophisticated software to trade within seconds of a trading opportunity. It can be a little difficult for a new trader to get the hang of it at the beginning. So, if you are planning to trade in the currency market, here are a few tips that can be the ice breaker.
Account Opening Form
Photo ID proof: PAN card / Voter's ID / Passport / Driving license / Aadhaar card
Address proof: Telephone bill / Electricity bill / Bank statement / Ration card/ Passport / Voter's ID / Registered lease or sale agreement / Driving license
Financial Proof: Current ITR acknowledgement, Current annual accounts, Form16 (in case you earn salary income), Current Net worth certificate, Current 1-month salary slip
Verification: Verification takes place via call or visit (by the brokerage house representative)
Application acknowledgement:
After your verification is successful, you’ll get your forex trading account login details. You can then begin trading after successfully setting it up
The online trading platforms have transformed FOREX trading. It helps in price discovery and speedy executions. There are several advantages of opening an online trading account, like the ones listed below.
With all these benefits and seamless processes, it makes sense to open forex trading account with Angel One today!
Conclusion : Currency trading is like any other form of trading. There will be days when you will make several winning trades, and on the other days, you may lose. Learn from your mistakes and build a better strategy. Find a good broker to open an online forex trading account and don’t hesitate to tap into their market wisdom.
The online trading platforms have transformed FOREX trading. It helps in price discovery and speedy executions. There are several advantages of opening an online trading account, like the ones listed below.
With all these benefits and seamless processes, it makes sense to open forex trading account with Angel One today!
Conclusion : Currency trading is like any other form of trading. There will be days when you will make several winning trades, and on the other days, you may lose. Learn from your mistakes and build a better strategy. Find a good broker to open an online forex trading account and don’t hesitate to tap into their market wisdom.
| Contract Specification → | |
|---|---|
| Underlying | Rate of exchange between 1 USD & INR |
| Pair | USD/INR, EUR/INR, GBP/INR, JPY/INR |
| Contract Months | 12 consecutive calendar months i.e. a view up to 1 year in future can be taken |
| Expiration date and time / Last trading day & time | At 12:30 noon, two working days prior to the last Mumbai Interbank Settlement day of the month |
| Min Price fluctuation / Tick size | 0.25 paise or INR 0.0025 |
| Settlement Daily Interim MTM settlement Final settlement | Cash settled in INR Based on daily closing price of the contract Based on LTDs RBI reference rate |
| Margin required for 1 lot USD/INR | 1.75% on the first day & 1% thereafter |
| Market timings | 9:00 AM to 5:00 PM |
| Events likely to impact USDINR rate → | General trend for demand/supply of USD | Impact on USD | Impact on INR |
|---|---|---|---|
| Increase in exports of India | Excess inflow of USD in the country | Depreciates | Appreciates |
| RBI is selling USD to meet demand for the dollar | Supply of USD increases | Depreciates | Appreciates |
| NRI Forex remittance is increasing | Increase in USD inflow | Depreciates | Appreciates |
| Positive trade balance | Increase in USD inflow | Depreciates | Appreciates |
| Increase in exports of India | Demand for USD increases | Depreciates | Appreciates |
| Rise in global prices of commodities | Demand for USD rises due to costlier imports | Depreciates | Appreciates |
| FIIs buying back USD | Excessive USD outflow | Depreciates | Appreciates |
| RBI is buying USD to absorb excess USD due to Forex inflows | Absorption of excess USD liquidity | Depreciates | Appreciates |