The foreign exchange departments of the major banks are linked on a 24-hour schedule on a global basis. The two currencies involved in the transaction form a currency pair, where a representation of each one is executed by three letters - the first two letters representing the name of the country, and the third letter representing the name of the currency, for example, Indian Rupees: INR, United States Dollar: USD, Eastern Caribbean Dollar: ECD, Australian Dollar: AUD, Japanese Yen: JPY, etc.Īs mentioned earlier, the foreign exchange market is decentralized, highly liquid, and global and the participants in the foreign exchange market include central banks, commercial banks, brokers, etc. With a market of this high flexibility, finding a buyer when you're selling and vice versa is much easier compared to any other market space.įorex trading occurs when the buying-selling of one currency for another takes place as a part of the same transaction and categorically at the same time.
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If you think a currency will increase or decrease in value, you can buy or sell it accordingly. However, you can hit big or lose it all just as easily. It is legally allowed to trade Forex within Indian Exchanges like BSE, NSE, MCX-SX. Just like stocks, you can buy or sell a currency based on what you think its value is or by simply strategizing where its value is headed. Who is eligible to trade in Currency Futures markets in India? Why do we have Exchange Traded Currency Derivatives? Also, the exchange rate is highly liquid and fluctuates continuously, understanding which requires lucrative skills and broad insights into the market-based trading system. For example, on your trip to France, you converted your rupees (INC) into euros and when you did this, the forex exchange rate between the two currencies, based upon the supply and demand at that point in time, determined the number of euros you get for your rupees.
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Simply put, forex trading is the act of buying and selling currencies and if you've ever traveled overseas, you've made a forex transaction. With an average daily trading volume amounting to $5 trillion, the global stock market doesn't even come close to this.
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The forex market is the largest and also, the most liquid market in the world. What Is Forex Trading? How is Forex Trading done in India?įorex (FX), also known as foreign exchange or currency trading is a global market, decentralized in nature, where all the currencies of different economies are traded- sold and bought.