Tue. Jan 21st, 2020

What is Forex Trading? And how to start.

Forex trading

Regardless of whether or not you are familiar with Forex Trading, it is also a great way to make a profit and earn from the investment. Therefore, before understanding this, we have to understand that each country has its own different currency. And the currency of each nation is weaker and stronger on the basis of value than each other. It is meant to say that in this era of globalization, a business can be done anywhere in the whole world and the internet has made it easier. Today, if a person wants to sit in India, he can earn foreign currency like Dollar, Euro, Pound, etc. All this is possible due to the internet.

Well in this article we will try to get our attention only on Trading. This is because present-day Forex trading can also become a means of earning. But this work can be done only through a registered forex broker. However, our fascination for the currencies of different countries comes from childhood, so if we ever come to the currency of a country other than India, we start storing it. This attraction towards currencies as an adult makes us curious to know more about Trading. Keeping this eagerness of the people in mind, today we are trying to learn about foreign currency exchange trading.

What is Forex Trading

The first word in forex trading is forex meaning foreign exchange. In simple words, forex trading means trading of different foreign currencies between each other, that is, in this process, the currencies of different countries trade as their value keeps on decreasing. Any person who wants to make a deal of any kind from abroad may need the currency of that country to buy that deal. Whether someone has gone on a vacation to visit, or wants to buy something from abroad, or is paying for a service, etc., he needs the currency of that country.

For example, A person may need US Dollar to pay a college fee-based in the US, because a college based in the US will not accept fees in Indian Rupees. Therefore, to pay in dollars, a person must first buy the US Dollar. To buy these, a person will have to pay in Indian Rupees based on the dollar value fixed at that time. It is only due to these requirements that Trading starts where foreign exchange is sold and exchanged. And where the person obtained the US Dollar by paying Indian rupees, it is called Exchange. In this case, the US Dollar will be purchased from the foreign exchange market by this exchange. In simple words, trading is called Forex Trading.

How Forex Trading Works?

Forex Trading is also like equity trading, the only difference is that in equity trading, the value of a share is in the deciding role for earning or loss. So at the same time, exchange value plays a pivotal role in forex trading. To earn from Forex Trading, a person can buy any currency as per his requirements and information. And for a better understanding, you can read the examples below.

For example: Suppose a person named Pramod wants to take advantage of the rising prices of the dollar since the dollar is trading at Rs 70 today. Pramod feels that on the basis of his knowledge and experience, it can go up to Rs 73 within three months. So, in this case, a person can buy USD and can sell it when it reaches Rs 73 after three months. In this way, the person will be able to earn up to 3000 rupees for every 1000 $.

How to Start Forex Trading

Although Forex Trading in India is far out of the reach of the common people, there are many reasons why this process requires more investment to get more profit. And other people are often confused about whether this kind of work is legally right or illegal in India. Therefore, it is necessary to make it clear here that the Reserve Bank of India has set a lot of terms and conditions for forex trading. Therefore, this process called Forex Trading can be done by only those who have an account with a SEBI Registered Broker.

This is to say that any person who wants to do forex trading, it is very important to have an account with a forex broker. Forex is currently legally permitted on some Indian exchanges, BSE, NSE, MCX-SX (Multi Commodity Exchange), etc. To do Forex trading in India, one needs to open an account with a registered Forex broker. And through this account one can do Forex Trading.

Some tips for Forex Trading:

Although, as we have also mentioned in the above sentence, Forex Trading also works on the lines of equity trading market share market. Where the price of the share in the share market determines the profit loss, the exchange price in it. Therefore, it is not necessary that the person who does trading will get profit only, he may also have a loss. So here below we are mentioning some things which can be followed by successful forex trading.

  • Before investing in Trading, make sure that you have proper knowledge of the market and enough experience.
  • Although the Forex market is open 24 hours five days a week, the Indian market closes at 5 pm. Hence one should opt for intraday.
  • There is a need to be careful with scams etc. Do this type of trading only through a registered forex broker.
  • Set a stop loss for each trade otherwise it may fail.
  • Make a plan to trade before Trading and always follow it.
  • Always keep your emotions separate from trading, because, in emotions, a man often takes impractical decisions.
  • Be careful not to trade for your losses, but only when you feel that it is right for you.

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