Forex Trading means buying and selling foreign currency for making a profit. Many people in India are keen to buy and sell foreign currency especially US Dollar. The main reason is increase in dollar rates. Suppose you are a beginner and planning to start Forex Trading in India, here is a complete article explaining – How to do Forex Trading in India? & Benefit and drawbacks of doing forex trading.
What is Forex Trading?
Forex means foreign exchange. It is a process of converting one currency to another currency. It is also known as FX (Forex). The act of buying and selling foreign currency for making money is known as forex trading. The process of forex trading is completely online. Let’s try to understand this by example.
Suppose you visited abroad and you have carried $1000 with you by exchanging rupee. You paid Rs.70 per dollar for exchanging. After a week, you come back with $500 on your hand. You exchanged dollar again at that time Rupee cost was Rs.72. This means you made a profit of Rs.1000 by trading currencies.
The above process of trading in currency can be done online. It is known as Forex Trading.
How to Do Forex Trading?
The step to be followed for doing Forex Trading are given below.
(1) First of all, decide the currency in which you will be doing trading. The currency could be dollar, Euro etc. Trading will be done in pair. USD/INR, EURO/INR, GBP/INR and JPY/INR is permitted by Regulatory authorities SEBI and RBI.
(2) The second step is deciding the deal size. The deal size is based on the investment amount. If you are beginner start with smaller amount.
(3) Next step is to decide forex broker. Make sure to select broker with competitive brokerage rates & secure robust online platform.
(4) Decide buy or sell action. The action will be decided based on the trend. Suppose you decide to trade in USD/INR and you expect that dollar price will be rising in future you can opt for buying dollars.
Things to consider before starting Forex Trading
Risk – You must know that forex trading is risky in nature. You may likely to lose money while doing currency trading. Avoid trading with borrowed capital.
Broker – Select your broker carefully. There are multiple fake or unreliable online brokers. Scrutinize broker with require details such as service support, trading platform, trustworthiness and brokerage charges.
Currency Pair – You should focus on single currency pair at initial stage. Once you gain experience and knowledge you can expand your wing and try with multiple currency pair.
Trade Amount – Start with small amount and increase size of your trade once you get greater profit.
Best Forex Broker in India
There are multiple forex traders available in the India. Here is list of Best Forex Broker in India.
- SBI FX Trade
Benefits of Forex Trading
- One can do forex trading online 24×7 anytime anywhere with internet connectivity.
- The liquidity in case of forex trading is high. You can sell your investment at any time.
- A stock market is volatile in nature. However, foreign currency usually follow one type trend which is easy to predict.
- Entire trade is transparent and in your control.
- You have multiple currency options for trading.
- You can earn lot of profit by means of doing currency trading.
Drawbacks of Forex Trading
- The currency trading is risky in nature. You are likely to lose money.
- You need to pay brokerage cost for doing currency trading.
- There are multiple online fake brokers. You need to be careful while selecting broker.
Forex trading is one of the best career option which can help you in earning lot of profit. However, you need to be careful and mentally strong while starting a forex trading.