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Forex Trading Basics

Forex Trading for Beginners

Trading of currency in foreign exchange is called Forex trading. With a trading of $5 trillion per day, it provides an exciting way to make money by predicting the direction of the market with a small original investment.

How to do Forex trading?

Online forex trading is a simple and best way to do forex trading. There are numerous players in the market that provide the service of doing forex trading. Most of the major players have dedicated customer support team to ensure hassle-free trading along with professional guidance and training if required. While choosing the broker it is best to look out for the established and reputed names in the market which signifies that they know how to manage their clientele.

How to open a forex trading account?

Like equity market, for forex trading also, a trading account is required. Each provider will have a different services and account type, so it is better to go with the one that suits your need. There are two things that should be kept in mind before selecting a broker. Leverage and commission/ fees. Leverage is the power to control a large capital with small initial investment. For Eg: 50:1 leverage gives one the control over Rs. 50 with investment of Re. 1. Leverage helps in making big gains but also might lead to large losses if the market does not go your way.Commission/fees is the amount charged by the brokerage for every trade done through them.

What is Forex brokerage?

The entity that connects the trader to the forex market is the Forex brokerage. Forex, unlike equity which is traded on a single platform like BSE, NSE; is traded electronically between banks with varying prices from bank to bank. Forex brokers provide traders consolidated data of the rates by giving an approximate average of the currency rate at which trading can be done. Brokerages make money on every transaction done through them by charging a commission.

What is Zero brokerage?

Some brokers have plans of zero brokerage. This is basically broker charging for a subscription of services for a specific period of time without charging brokerage or fees for every transaction. The structure and plan for zero brokerage plan differs from broker to broker and it is advised to understand the plan completely before buying it.

How is the Forex market in India?

Forex trading is operated by Central government of India under FEMA 1999 (Foreign exchange management act). Trading on Foreign exchange or forex is not allowed but trading on Indian exchanges like BSE, NSE, MCX-SX which trade in USDINR, JPYINR, GBPINR, EURINR derivatives along with future and options is allowed.