Forex futures trading in India - Generatebucks

Forex futures trading is more lucrative than ever before. The Forex trading market began as an over-the-counter financial vehicle for large banks, financial institutions and large international companies to hedge against foreign currency exposure. 

Forex Futures trading in India - Generatebucks
Forex Futures trading in India - Generatebucks

With easy access of real time financial data, and Forex trading software available to most investors through the internet, today's Forex market includes an increasingly large number of individuals and corporations who are speculating or hedging foreign currency exposure by phone or any registered online Forex trading platforms. Forex futures trading has become an alternative investment vehicle for many traders and investors.

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You might have heard tales of individuals who had their lives changed after joining the Forex futures trading marketplace. Yes! Every investor has a chance to earn but what is generally not said is that with it comes a big risk. Forex futures are very volatile just like the Forex spot market. You stand a chance of losing everything you own based on trading strategies, if any. So before dipping your toe in it, it is essential to become knowledgeable about everything in this market.

As an investment tool, Forex trading provides both large and small investors with higher flexibility when determining the appropriate Forex trading and hedging strategies to implement. In India, most Forex trading is conducted through registered brokers.

Forex futures trading in India

Forex futures trading in India is termed as FX future. It is a contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date. Forex futures trading in India are regulated under NSE and MCX. Looking at volumes on both exchanges, I would recommend selecting NSE. It definitely is better in terms of volume and possibly volatility when it comes to future trading.  

Things to know before you start trading

Currency Pairs

FX futures are traded in currency pairs. Among the crucial stages in learning to trade Forex is to understand about the currency pairs. Currency pairs are majorly categorized into major, minor and exotic pairs. Major currency pairs are those which contain the USD and the currency - New Zealand dollar, Japanese yen, GBP, Swiss Franc, Canadian Dollar, Australian Dollar, along with the euro.

In India we trade in exotic pairs which are one major currency paired with the currency of an emerging economy. In a pair, first is the base currency while the next one is called the quote money. You purchase or sell the base currency in exchange, when trading. As an example let us pick-up the most traded Forex Future contract USD INR May contract. In this USD will be base currency and INR will be the quote currency.

Glancing the Forex futures trading markets in India regulated by NSE and MCX, an investor could trade four currencies vs rupee. Currently traded currencies are USD, Japanese Yen, Euro and Pound.

To understand how this really works we can pick a recent contract USD INR which has been trading at 69.71. Now if a trader believes that Indian Rupee will get strong, he/she will create a short position in USD INR contract and if a trader believes that dollar might get strong than he will have to create a buy position in this contract. It works similar to the future markets but trader would have to speculate based on USD. 

Find a Reliable Broker

Forex futures trading would be full of risks as mentioned before. So before you start investing big money, you need some kind of protection in the shape of a broker. A good broker will facilitate you into things giving time to practice. Ask around particularly in active forex forums to find reliable brokerage companies. If you are confused, I could connect you to few brokers whom we trust and you can choose among them.

Do your homework

We always suggest to read and do detailed analysis of historic data and global trends before you invest in FX future. It could be great if you can arrange for a demo account for practicing currency trading.

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Forex futures trading - Generatebucks
Forex futures trading
Forex futures trading - Generatebucks
Forex futures trading

Remember these market are extremely volatile and very risky and you might land up losing everything if you do not follow a strategy properly. There are research agencies who share regular information about trends in FX futures market but ultimately, it is your hard earned money on stake, SO BE CAREFUL.

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