By allowing the trade to take place in foreign currency, you can easily gain huge profits – if you understand the dynamics of the same.
Many banks, investment management firms, hedge fund majors, and retail brokers all opt for Currency trading in India to gain maximum profit. It helps investors to take a position on various currencies and then make legitimate profits from them.
Points to consider while opting for currency trading in India
In India, currency futures are settled using cash. This means that instead of physical settlement, currency trading in India happens through a virtual network. So, there will be no availability of the currency after the expiry. Such transactions take place through NSE, BSE, and MCX-SX.
To be successful, you need to understand the goals, risks, and compliance strategies. Here are a few pointers for currency trading in India –
- Identify your trading style –
Every trader has a unique trading style. This means that you have your risk-taking ability. Use this to your advantage while opting for currency trading in India.
- Choose the right broker and platform for trading
Having a good broker is vital to currency trading. Although in India, many options are available yet the best one will educate and update you about the currency market and its outcomes. For instance – the trader should specify the impact of the recent economic influx of 20 crores from the Indian government on your investment aspects.
- Understand your limits
Before you opt for any form of currency trade, specific entry and exit points for the same. No trade is a sure shot guarantee and one needs to be prepared for exiting when the situation becomes unfavorable. It is good to keep your losses to a minimum.
Major risks associated with currency trading in India
It is vital to know that currency trading in India is risk oriented. You will be dealing with currency pairs and major variables that may impact on the returns to a large extent.
Therefore, when you opt for currency trading, it is important to limit the risks. Also, avoid trading on borrowed funds and overstretching yourself. This will increase the risk beyond your control.
Similarly, it is common to have both winning and losing trades. Learn well from these mistakes and use them to create a successful trading mantra. Keeping a notebook of all such investment and outcomes is vital for final evaluation.