Priya who once upon a time showed clear preference for the ‘safe’ fixed deposit, got habituated to investments that are subject to market risks when mutual funds gained popularity and became more commonplace. Like her, today across demographics, Indian investors are less shy of trading because most have experienced good returns. A good place to begin is forex trading.
What is currency trading?
Currency trading or forex trading is to buy or sell currency in pairs. For example, today the US dollar stands at 70.85 Indian rupees – if you expect the dollar to appreciate against the rupee, you buy more dollars. Conversely, if you expect the dollar to depreciate against the rupee, you will buy rupees. You must always choose a pair of currencies like INR/USD, for example.
How does it work?
- Step 1: Open a trading account. You can get started with an online currency trading account on the Angel Broking website absolutely free and begin trading right away.
- Step 2: Do your research. It is important to know what to buy or sell and when to buy or sell. Watch trends keenly. Diligence is the name of the game. If the Indian rupee has been falling against the US dollar, it might be a good time to buy rupees and sell dollars, for instance, depending on future projections.
- Step 3: Take a test drive. Cricket invests in test matches not for nothing. People test cars and even mattresses before buying them. It is imperative to test your skills when playing the forex game. Before you open a forex trading account try the trial trading account available on the Angel Broking Make your mistakes with virtual money and find your way around the systems and ticker symbols before going live.
- Step 4: Start at a modest initial buy or initial investment. If you emerged very successful from your test drive, you are probably very optimistic and want to start with a big bang as you navigate your online currency trading account. However it is best to start at a small amount. Anyone who has traded in forex for a respectable amount of years will tell you that it takes hands-on practice to understand your own emotions and account for slippage ie expected rate versus actual rate of execution. Moreover, you can make profits at any amount.
- Step 5: Set a stop loss or limit order with your broker. If your losses cross the set amount, all positions on your forex trading account will be closed immediately ie no further trading will occur on that day. You can limit your losses by setting this up free of charge.
How to go about choosing a broker?
Put your money with a broker that boasts a good track record and a ton of experience. Start-ups might make for exciting and empowering work environments but play safe with your hard-earned money. When you open an Angel Broking currency trading account you benefit from over three decades of experience dating back to 1987.
- – Nil charge for opening an account
- – Online currency trading account
- – 30+ years brokerage track record
- – Trial trading account availability
What are the benefits of currency trading?
- – Currency trading transaction costs are relatively low and affordable even for beginners in the trading space.
- – There are no middlemen. Your profits are yours. You do, however, need to pay taxes on your earnings.
- – Forex trading does not involve the risk of loss due to insider trading.
- – Currency trading is instantaneous – you don’t have to wait for the execution and settlement of the trade
Is it safe? How can I curtail my risk?
Currency trading is subject to market risk but you can minimize your exposure to risk with:
- – A trusted broker
- – A set stop loss
- – Diligence in conducting research
- – Honest risk management (which means avoiding letting your emotions run the show)
If you have a knack for observing and riding market trends or if you are looking for a quick and lucrative way to maximize ROI or alternatively if you are looking for a safe, easy-to-navigate entry point into trading, currency trading is a must-try option.