8 Things to know about Currency Trading in India - LKP Securities
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8 Things to know about Currency Trading in India

Nowadays everybody knows about stocks, trading and has a fair idea of how the stock market works. But if we look into a bigger picture there is a high potential market about which a lot of people are not aware as well familiar with. This route is known as currency trading. Once you get into foreign currencies it gives you a profit but if you can spot where and when the right opportunities are and you know how to use them for your benefit. It is understood the basic concept of currency market trading and currency features in India so that you can take advantage of currency trading for your wealth creation.

What is the currency market? 

The currency market is nothing but a place where people across the world participate in the market. They buy and sell different currencies. Currency trading participants comprise banks, corporations, central banks, investment management firms, retail forex, brokers, hedge funds, and investors like you. It is a very good way to make a profit. 

What is the currency market''s future? 

It is also known as a foreign exchange market and it helps investors to take a position on different currencies and also helps investors across the world to use this currency for future contracts for trades. currency future allows investors to buy or sell a currency at a future date and a previously fixed price.

What is the Indian currency market?

Currency futures are traded on various platforms offered by an exchange like NSE, Bombay stock exchange, MCX- SX. In India, the currency market usually takes place from 9:00 a.m. to 5:00 p.m. for that you need to 1st open your forex trading account with the broker to start with your trading in the live currency market.

Is Currency Trading Legal In India?

Since the Federal Reserve Bank of India employs various restrictions on currency trading, people might assume forex trading to be illegal. However, that’s not the case. People can trade forex pairs involving Indian rupees as a base or quote currency. Additionally, the RBI has also allowed traders to feature three cross-currency pairs to the list of permitted tradable assets, including EURUSD, GBPUSD, and USDJPY.

What are the types of currency markets?

Across the world the currency market is of 2 types : spot market or cash market. The cash market is the future market of currency trade. In India, the future is the preferred way of doing trades. 

What are the basics, and what all things are required to start currency trading?

The first thing to recollect is that in currency trading, the trade is usually between a pair of currencies. Unlike in equity or stock exchange where you purchase a share of 1 company, currency trading in India will involve taking an edge on a currency pair.

For instance, the EUR/USD rate represents the amount of dollars one Euro can purchase. If you think that the Euro will increase in value against the US dollar, you purchase Euros with US dollars.

When the rate of exchange rises, you sell the Euros back, and your cash in your profit.

Things Required:

Take the subsequent steps to start currency trading in India. The currency market in India is growing, and it''s going to be the proper time to require your rightful place during this space.

  1. Open a currency trading account with a reputed broker, with the company who doesn''t charge any account opening fees.

  2. Abide by the Customer KYC (Know Your Customer) norms.

  3. Deposit the specified margin amount.

  4. Get requisite access credentials from your broker to start. 

How Does the Currency Market Work?

The currency futures in india market may be a decentralized worldwide market. Today, it''s the world’s largest financial market and has a mean daily volume of about $5 trillion. an outsized currency trades involve the US dollar together with the currencies within the currency pair.

In Indian exchanges, the currency derivatives segment provides trading in derivative instruments like currency futures on 4 currency pairs, cross-currency futures & options on 3 currency pairs (EUR-USD, GBP-USD, and USD-JPY). Demand and provide make the currency market work.

Which Things to Recollect While Trading In the Currency Market?

To be a successful currency trader, you''ve got to urge your basics, goals, and risk management right. Here may be a list of belongings you should remember:

  1. Understand your trading style - Every currency trader features a trading style. This is often aligned with the trader''s risk profile. Understand yourself properly before doing trades regularly.

  2. Choose the proper broker and platform - Having an honest broker in currency trading is vital for fulfillment. an honest broker will handhold you when it involves forex trading in India, and make sure you are updated about live currency market news,

  3. Know your limits - Before you are doing any currency trade, specify the entry and exit points for the trade. No trade may be a sure-shot guarantee then be prepared to double down or exit when things are unfavorable. an honest idea about the possible trade scenarios will assist you tons. Keep your losses small.

What Are The Risks Involved In Currency Trading?

Please confine in mind that forex trading involves a high risk of loss. Since you''re handling a currency pair, there are more variables. But, risks are involved in any financial trade or investment.

When you do currency market trading, limit the risks by never trading supported borrowed funds and never stretch yourself. These are the sole two major risks. Like in any sort of trading, there''ll be days once you will have more winning trades and there''ll be some days once you lose more. Learn from your mistakes and use them for your success. An honest way would be to keep a notebook about your trades and see where you went wrong.


Although forex trading is becoming increasingly popular worldwide, the currency market of India is yet to evolve. The central government of India seems to be taking initiatives to supply more relaxation to potential traders and financial intermediaries.

Undoubtedly, the Indian currency market has a lot of potential to supply lucrative returns. However, the RBI restrictions appear to be the barrier that forestalls traders from exploring more opportunities.

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