Currency trading in India now has many takers. Even individual investors are now looking at currency trading to invest their money in. Online currency trading is seeing a boom. Here are some benefits of currency trading.
- Trading for 24 hours
As you trade in international currencies, the market is open till 5 pm.
Hedging is the route you take to reduce your losses in an unexpected event. In currency trading, you can do simple hedging, complex hedging, multi-currency pair or forex option.
Simple or direct hedging is where you place a trade to buy a currency pair and at the same time, you place another trade to sell the same pair. Complex hedging is when you need to look for different approaches other than direct hedging because the trader will not allow you to take up a direct hedged position in the same account. A multi-currency pair is when you make a hedge using two different currency pairs. A forex option is when you agree to conduct an exchange at a specific price in the future.
Speculation is when you buy or sell currency under uncertain conditions expecting to earn huge gains. Speculators buy the currency when it is weak and then sell the same currency when it gets strong.
Arbitrage is when a trader is able to make profits based on exchange rates in different markets and exchanges. Here a trader takes advantage of the inefficiencies in the price which occur for a small window of time. Hence the trader needs to act fast to gain profits.
Currency trading brokers in India let you trade on leverage only if intraday trading is involved. Leverage is when you trade in currency derivatives. You trade more money than what is available with you. You only have to pay a margin price of the traded value.