Currency trading in now catching the attention of many Indian investors. Currency trading is a form of trading where you trade in currencies hoping to earn profits form the fluctuating currency prices all around the world. Currency trading is also called Forex Trading. The currency trading market is considered the largest investments market in the world. As the popularity of currency trading is growing, a lot of retail investors are now trying to trade in currencies.
Here is a glimpse into the gigantic world of currency trading.
Currency Trading Facts
- Of all the forex transactions around the world, 41% is done by the UK. It is the biggest forex trading country in the world.
- Free-floating currencies only became available in the year 1973. In this type of market, the rates are decided on the basis of demand and supply of currencies around the world. Prior to this, the exchange rates were placed on currencies were fixed.
- When you trade in currencies you do not physically buy them.
- You gain value for buying and selling currencies virtually which are later enchased in INR.
- Currency trading exchange is an exchange with the highest liquidity in the world.
Must Know Currency Trading Jargons for Beginners
Base Currency- In the Forex market the currency unit prices are designated in pairs. Base currency is the first currency which appears in a quotation. For e.g., in the USD/INR pair, USD or US dollars is the base currency. It is also called a transaction currency.
Quote Currency- The secondary currency in a currency pair is a quote currency. For e.g., in the USD/INR pair, INR or Indian Rupee is the quote currency.
Pip- A pip is the smallest increase in the price of the currency. Any change which happens in the rate of a currency is its pip value.
Bid Price- The Bid price is the rate at which you can sell a currency pair in the currency trading market. It is the price at which you buy a unit of your base currency using the quote currency.
Ask Price- This is the price which a trader offers you for a pair of currency. It is the price which you will receive in quote currency for a unit of base currency.
Currency Trading in India
When you do currency trading in India, you buy a few units of both the currencies in the pair. You start trading in currencies you need to open a trading account with a broker. It is of high importance that you choose a trustworthy service provider. Make yourself familiar with currency trading basics. Your service provider can help you with training sessions and share demo videos to help you understand how to invest in currencies.
For starters, focus on only one pair and invest small. Understand how global and local events affect the market.
For currency trading in the market, the following pairs are available for trading.
Currency trading can help you diversify your portfolio. This is a market which provides you high liquidity hence gives you the freedom to enter and exit as per your wish.