Forex trading isn’t that widespread in India since it was introduced to the national market not that long ago. The first currency pair traded on the National Stock Exchange of India in August 2008, and it was USD/INR. It took more than two years to introduce three other pairs of major currencies with Indian Rupee, which were EUR/INR, JPY/INR, and GBP/INR, which happened in October 2010. And it still didn’t do much good until 2018, eight years later, when three more pairs were added: EURUSD, GBPUSD, USDJPY.
Since February 2018, forex trading in India took a giant leap forward and is still rising, with more and more people trying to figure out how to learn forex. Many Indian residents are already trading on NSE and impatiently waiting for the government to allow trading internationally. That’s a big downer for Indian residents because, under current legislation, they cannot trade in foreign currency abroad.
Another unfortunate condition is that NSE working hours don’t quite match the working hours of the leading stock exchanges worldwide. It means that most spikes and downfalls happen when the NSE is closed, and Indian traders cannot profit from them. With the current dynamics, there is hope that the Indian government will soon allow people to trade abroad, and if you want to conquer the international forex market – you have to be prepared for that! If you’re a beginner, we have an up-to-date guide explaining how to learn Forex without unnecessary complications. Here we’re going to explain to you the basic concepts of trading so that you could understand more when you’ll get into serious learning materials.
What Is Forex Trading?
Trade itself is a concept that’s thousands of years old. However, the idea of trading currencies is much younger and became widespread since the gold standard was abolished in the US on August 15, 1971. When the value of the US dollar, as the most stable and widespread currency, wasn’t fixed in gold anymore – it opened unprecedented opportunities for everyone to profit from currency exchange rates. So the history of forex trading began.
In forex trading, you always trade between a pair of currencies. It’s different from the stock market, where you purchase shares of one company and wait for their price to rise to sell them. In forex, if you’ve picked the right pair, you can profit from more events than in the stock market. For example, you’ve purchased a USD/INR currency pair, meaning you’ve bought US dollars using Indian Rupees. Now, the profitable outcome for you is when USD strengthens against INR, and when it does – you sell the pair and collect your profit. That’s the cash market, but it’s not all because there are also derivatives, such as futures and options.
Futures are contracts where the buyer is obligated to purchase some goods or currency at a specified date in the future at a predetermined price. Both buyer and seller must abide by this agreement, and in case one of them cannot meet its terms – they have to pay the forfeit or perform another action if specified in the contract. Options are written agreements where one may or may not execute their right to buy or sell a particular commodity at a specified date in the future at a predetermined price.
If you wanted to learn forex – we hope that this material helped you to understand the basics. With this, you can start working on more advanced learning materials and will soon be ready to enter your first local trades, or even the international ones, as soon as they become available for Indian residents.
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