Currency Trading

Currency trading has the potential to generate great returns. You can reap the following benefits by trading in the currency market:

1. Diversification since they have lower correlation with equities
2. High liquidity as the market is large and global and operates round the clock
3. Solid leverage as foreign exchange brokers allow traders to borrow against a small amount of capital, thereby offering a chance to open a high position.

Currency derivatives are future and options contracts, through which you can buy or sell a specific quantity of a particular currency pair at a future date. 

It is similar to the stock futures and options. The difference is that the underlying asset here is the currency pair (ie, USD/INR, EUR/INR, JPY/INR or GBP/INR) instead of stocks. For example, as a currency trader, if you believe the rupee will increase in value, then you buy dollars with rupees. 

Alternatively, if you believe the dollar will appreciate further, then you buy rupees with dollar. If the exchange rate fluctuates as per your trade, then you will make a profit.

The currency market is where currencies of different countries are traded. It is also known as the forex market. Currency Market is touted to be one of the largest financial markets in the world. The currency market is highly liquid and dynamic. It enables traders to speculate on the value of one currency against another. Based on this, they buy and sell national currencies in approved pairs. 

This market has a diverse range of participants, including hedge funds, banks, central banks (like the RBI in India), corporations and investors. As a result, the trade volumes are high.
In India, currency trading occurs through the derivatives segment.

There are 7 permitted pairs for currency trading in India: USD/INR, EUR/INR, JPY/INR, GBP/INR, EUR/USD, GBP/USD, and USD/JPY. 

In this pair, the first currency is called the base currency and the second is the quote currency. The base currency is always fixed to 1 unit of that currency. Quote denotes the amount of this currency you need, in order to buy 1 unit of the base currency. This shows the value of the quote currency against the base currency. 

Traders aim to benefit from the fluctuation in the value of these currency pairs. Currency fluctuations occur due to a broad range of factors, including macroeconomic and geopolitical factors as well as inflation outlook, interest rate differential, and so on.

To trade in currencies, you can open a trading account with PL. Once your account is active, you can start trading. 

Make sure you understand the risks and accordingly trade in currencies. 

The benefit of trading in currencies with PL is that you get access to PL’s award-winning research reports and calls. Our industry leading analysts publish reports on market trends in the short and long term after analysing local and global factors impacting currencies. PL also provides dedicated relationship managers (RMs) along with the convenient call and trade facility. You can also trade online, with PL’s DigiTrade app. Write to currency@plindia.com for more information on PL’s currency services or account opening.

The currency market in India offers an attractive investment opportunity. 

Complete your KYC and open a trading account with a PL to get started.

Here are the necessary steps investors must follow:
• Get a PAN card
• Open a trading account with PL and complete KYC
• Understand the market, exchange rates, factors that impact it, different trading strategies, etc
• Understand your own risk appetite, investment horizon and goals
• Once you start trading, always stay informed

PL provides expert research calls and reports as well as personalised guidance to help you in trading in currencies

For hedgers and currency-based entities, we provide the following services:
• Customised solutions and advice as per specific requirement for hedging in currencies.
• Robust automated risk management system with state-of-the-art infrastructure
• Reports on market trends in the short and long term after analysing local and global factors impacting prices
• Brand and corporate parentage
• Investment plan for large clients, who want to invest in currencies