Forex (Currency) Trading: Trade in the World’s Largest Market
In our previous article on Commodity Trading, we explored how traders use physical assets like gold, silver, and crude oil to profit from price movements. But what if you could trade something that powers every global transaction, works 24×5, and offers massive liquidity?
Welcome to the world of Forex (Currency) Trading – where currencies like USDINR, EURINR, and JPYINR are the stars!
What is Forex Trading?
Forex (Foreign Exchange) trading means buying one currency and selling another simultaneously as part of a currency pair.
✅ Example: If you buy USDINR at 83.20 and sell at 83.50, you’ve earned a 30 paise profit.
The Forex market is the largest and most liquid financial market in the world, with over $6.6 trillion traded daily globally.
How Does Currency Trading Work in India?
In India, forex trading is regulated and limited to RBI-approved currency pairs on recognized exchanges like NSE and BSE.
✅ Commonly Traded Currency Pairs (INR-Based):
| Currency Pair | Meaning |
|---|---|
| USDINR | US Dollar vs Indian Rupee |
| EURINR | Euro vs Indian Rupee |
| GBPINR | British Pound vs Indian Rupee |
| JPYINR | Japanese Yen vs Indian Rupee |
You do not receive actual currency. It is all settled in INR as derivative contracts (Futures & Options).
Forex vs Commodity Trading
| Feature | Forex Trading | Commodity Trading |
|---|---|---|
| Traded Asset | Currencies | Physical goods (gold, oil) |
| Liquidity | Very High | Moderate to High |
| Trading Hours | 24×5 (Monday to Friday) | Varies (mostly 9 AM – 11:30 PM in India) |
| Volatility | Moderate | High (especially crude/gold) |
| Regulation (India) | RBI & SEBI | SEBI |
| Example Instrument | USDINR Futures | Crude Oil Futures |
Why Trade Currencies?
- High Liquidity
- Instant order execution
- Lower slippage
- Easier to enter and exit trades
- Lower Margin Requirement
- Typically requires ₹2,000 – ₹5,000 per lot
- Perfect for small capital traders
- Hedging Tool
- Useful for importers, exporters, and NRIs to hedge currency risk.
- 24×5 Market Access
- Trade Monday to Friday, even after stock market closes
How to Trade Currency Futures in India?
- 1. Open a trading account with a SEBI-registered broker (Zerodha, Upstox, etc.)
- 2. Fund your account and enable the currency segment
- 3. Choose a currency pair (e.g., USDINR)
- 4. Place a Buy or Sell order for the lot size (usually 1,000 units for USDINR)
- 5. Square off before expiry or let it expire for settlement
💡 Example: You expect USDINR to rise from ₹83.20. You buy 1 lot of USDINR Futures.
- Entry: ₹83.20
- Exit: ₹83.50
- Profit: ₹0.30 × 1,000 = ₹300 (before charges)
Pro Tips for Beginners
- 📅 Track economic news like RBI announcements, US interest rate decisions, inflation data, etc.
- 📉 Use Technical Analysis to find trends and entry/exit points.
- 🔒 Always use Stop Loss to manage risk.
- 🧪 Practice with paper trading before going live.
Margin, Lot Size & Tick Value (USDINR Example)
| Element | Value |
|---|---|
| Lot Size | 1,000 units |
| Tick Size | ₹0.0025 |
| Tick Value | ₹2.50 per tick |
| Margin | ₹1,800 – ₹2,500 (approx.) |
Risks to Consider
- Geopolitical risk: War, elections, and sanctions can move currency prices suddenly.
- Interest rate changes: US Fed or RBI rate decisions cause high volatility.
- Low leverage can limit profits – and also helps reduce losses.
Conclusion
Forex trading offers an exciting opportunity to trade in a globally interconnected market with high liquidity and low capital requirement. Compared to commodities, it provides lower volatility and tighter spreads, making it ideal for intraday and swing traders.
Whether you’re a beginner or looking to diversify from commodity trading, currency pairs like USDINR can be a smart next step.
If you’re starting, begin with small capital, learn with demo trading, and understand both the technical and emotional side of trading.
Start Your Trading Journey