Most people find it not easy to part with their money hard earned primarily for earning more capital. However this may be, there are people who don’t just invest in mutual funds, bonds,and mutual funds, but indulge in forex trading. Among most Indians, online forex trading is becoming popular with many investors finding it as the best way of investing their money.
How does Forex Trading Works?
In India, forex trading is the same as equity trading. While in forex trading, exchange rate matters but in equity trading, the rate of shares matters. You can either sell or buy currency pair depending on the expectation of movement in such currency. To understand how to make money through forex trading online in India, we will expound more using the example below.
Example of how to make money through forex trading
Let us assume you want to take advantage of the price of the dollar that is increasing. Perhaps your expectation is that the price of the dollar will increase to Rs 67 if you buy at Rs 64 in few months. Because of this, you may consider entering into a long position by purchasing USDINR contract on the online forex exchange. Assuming you sold it for Rs 67; you will get $3 for each dollar. Therefore, if you sold $1000 for a single contract, you will be making a profit of Rs. 3000.
In addition, you can make similar long and short position in GBPINR, EURINR or JYPINR
Forex Trading Gaining Popularity in India
Today, with the advent of secure web technologies, there are lots of information available on foreign exchange especially to newcomers in the market. This has given them enough time to not only speculate but also make necessary investments, which is mostly free of cost. In India today, forex trading offers a couple of advantages such as:
- Leverage: Forex brokers will give you the opportunity of trading the market by using leverage. You may be confused when you hear the word “leverage.” Leverage is the ability of a trader to trade more money on the market more than what you have in your account. For instance, you wanted to trade at 10:1 leverage, you may then trade INR 10 for each INR 1 contained in your account. What this means is that you have the power of controlling a trade of 100,000 INR using only 10,000 INR.
- Hedging: Perhaps you are an importer and want to make payments in USD in time to come; you can decide to hedge your foreign exchange exposure by buying USDINR while fixing your payout rate today.
- 24-hour Trading: Considering the fact that forex trading is global, currency trading continue anywhere in the world as long as the market is open.
Getting into forex trading requires certain kind of education. The best way of understanding how to make money through forex trading is by getting a quality forex trading education. You must learn all the effective methods to make money in the market.