SEBI okays NSE's plan for currency trading

India's first exchange for trading in foreign currency derivatives is likely to go live on the NSE's platform. NSE, the country’s largest stock exchange by volumes, on Tuesday got an in-principle approval from the Securities and Exchange Board of India (SEBI) to start an exchange to trade foreign currency derivatives, sources said.

According to plans, NSE will have a separate segment on its existing stock and derivatives bourse to trade in forex derivatives. It would also use its clearing corporation to settle the trades on the new segment.

“It’s not only the NSE brokers, most of the large and medium sized banks have been very supportive in NSE’s endeavour to start a currency exchange,’’ a source said. “They will get another asset class to invest in,’’ the source added.

Last week RBI, the banking regulator, along with stock market regulator SEBI, had made public the rules that would govern currency derivatives exchanges in the country. Soon after three bourses-NSE, Multi Commodities Exchange (MCX), the largest commodities trading bourse in the country, and Bombay Stock Exchange (BSE), the oldest stock exchange in Asia-had jumped into the fray to start forex exchanges.

Over the last few weeks, both NSE and MCX, had been conducting awareness programmes among probable market participants for a currency trading platform. When a forex derivatives trading platform goes live, Indian investors would also get newer forex trading and hedging products, industry players said. At present, in the forex trading space, market participants have the option of either trading in spot or the forward contracts.

To start with, RBI-Sebi combine has allowed futures contracts in rupee-dollar contracts. The roadmap is to launch contracts on other currencies post the initial trading phase

How to trade Forex

STEP 1:

The step 1 defines certain concepts and terms of Forex Trading-

Quotes are a vital part of the foreign exchange trading, as Forex trading is done in terms of quotes. Therefore, comprehending these quotes is the first important step.

Firstly, in a Forex quote, the currency listed first is known as the Base currency. For example, we have EUR/USD. Here, EUR is the Base currency.
Secondly, the base currency has always the value 1. In other words, the rate of other currency is calculated against 1 pt of the Base currency. For example, we have EUR/USD where EUR is the Base currency. Then 1 EUR = 1.2323 USD or the value of one currency against the other in the pair.
Thirdly, when dealing in terms of quotes, prices are expressed in terms of Pips. Pips can be defined as “percentage in points” and are mostly the fourth decimal point i.e. 1/100th of 1%.

Also used while trading through quotes, are two significant terms known as Bid and Ask. These two terms are responsible for making trading quote, a two-sided quote.
Bid can be defined as ''The price at which the base currency is sold concurrently buying the counter currency. Ask can be defined as “The price at which the base currency can be bought concurrently selling the counter currency''

STEP 2:

Step 2 illustrates the other key features of Forex trading which are namely, the leverage and the Margin. These two are immensely important in attracting the interest of the traders as they enhance the trading power of the investors.

The leverage is the ratio of the deposited amount to the amount that can be traded. Leverage enables the investors to deposit a small amount of money but still trade for a much larger amount. This way, investors can trade easily, utilizing less money to deal.

Margin, therefore, is the minimum amount required to be deposited before an investor starts trading. This can also be known as the initial amount with which the Forex trading account can be opened.

A detailed Example below illustrates exactly how Forex trading is done-
Supposing the current bid/ask price for EUR/USD is going by the rate of 1.5027/30, giving you the option to buy 1 euro with 1.5030 US dollars or sell 1 Euro for 1.5027 US dollars. Now, if you feel that the Euro is underrated against the US dollar, you would opt on buying Euros, selling your dollars at the same time. So you buy 100,000 euros by paying 150,300 dollars. You can then start analyzing the market, waiting for the exchange rates to rise.
As predicted, the rates begin to rise and then you decide a favorable rate at which you plan to sell your Euros to get a hefty profit. Supposing the Euro rises to 1.5090/93. Now, to realize your profits, you sell 100,000 euros at the current rate of 1.5090, and receive $150,900.
You bought 100k Euros at 1.5030, paying $150,300. You sold 100k Euros at 1.5090, receiving $150900. That's a difference of $600 or in other words, you successfully earned a profit of $600.
Return on Investment = $600

Always learn a lesson from the Forex Indicators, keep a watch, think long term and then take a step.

STEP 3:

MarketForex does e-trading using high end MarketForex softwares. Easily accessible and user friendly, they have a simple operating process. For instance, the currency pair to be bought or sold can simply be dealt with, by clicking on the sell or the buy key, placed in front of that currency.
After the deal to be done is selected, a quote is then displayed by the software, making it easier for the user to keep track of the records. Also, MarketForex software provides some attractive powerful features such as account details of the holder, like balance, leverage and margins, along with stop/limit orders.
The trader also has the option of selecting various other currency pairs for trading purposes. Before investing always analyse the forex market with various types of forex analysis.

What is Forex?

The largest financial market in the world, Foreign Exchange market, Forex or FX market, all the terms are used to describe the business of trading of the world's various currencies, with more than $2 trillion changing hands every day. Being an international foreign exchange market, Forex is a market where money is sold and bought freely. FOREX was launched in the 1970s, to become the biggest liquid financial market today, dealing in more than hundred times the daily trading on the New York Stock Exchange.

FOREX is a perfect market to invest in, as it is free from any external control and free competition. Mostly, all Forex trading are tentative and unlike the stock market trading, the Forex market is not conducted by a central exchange, but on the “interbank” market, which is thought of as an OTC (over the counter) market. The trading takes place between the two dealers, either over the telephone or through Internet, all over the world. The major trading centers are the ones at Sydney, London, Frankfurt, Tokyo and New York, making Forex a 24-hour market.

Forex Trading requires the employing fundamental as well as technical analyses. These analysis help a trader to foresee and determine the development in the price trends of currencies, based on which, he attempts to predict market changes and make profits. Fundamental analysis can be said to use techniques to analyze the value of a state’s currency with the help of its economic indicators, quality markets and political events and associations. Political stability also influences the exchange rate at Forex. Its not just that Forex Trading is intutive, rather its technical

While Technical analysis engages the study of patterns of price trends and movements, making it easier for the trader to predict the path of the future developments in the Forex market. The primary data for a technical analysis are values, be it the highest or the lowest values, the price of opening and closing in a definite period of time, and the amount of transactions taking place. Any factor, be it economic, political or psychological, having little or some influence on the value or the price, has already been measured by the market to be included in the price. We offer some very useful Tips for New Forex Traders.

Trading Psychology

"I wish I knew then what I know now." How many times has that thought rolled through your head? Our friend James has probably thought that about his trading career hundreds, if not thousands, of times. You see James started on the wrong foot as a Futures trader. He thought the most important thing to understand was the market. He focused all of his energy trying to learn about the market and didn't spend any time focusing on himself as a trader - and he paid the price.

Futures traders have to not only compete in the Futures market but also against themselves. You have the potential to be a successful Futures trader, but you also have the potential to be your own worst enemy. We, as humans, are naturally emotional. Our egos want to be validated - we want to prove to ourselves that we know what we are doing and that we are capable of taking care of ourselves. We also have a natural instinct to survive.

All of these emotions and instincts can combine to provide us with trading successes every now and then. Much of the time, however, our unchecked emotions get the best of us and lead us to trading losses unless we learn to control them.

Many Futures traders believe it would be ideal if they could completely divorce themselves from their emotions. Unfortunately that is next-to-impossible and some of our emotions may actually help us to improve our trading success. The best thing that you can do for yourself is learn to understand yourself as a trader. Identify your strengths and your weakness, and pick a trading style that is right for you. Don't get too far down the road, like James did, before you spend time learning about you.

The Forex Market

The Forex market is the largest financial market in the world. Nearly $3.2 trillion worth of foreign currencies trade back and forth across the Forex market every day. Forex stands for the foreign exchange - the financial exchange on which governments, banks, international corporations, hedge funds, and individual investors exchange foreign currencies.

Those of you who travel abroad frequently have probably also noticed that the exchange rates at the currency counter at the airport never seem to be the same. They are constantly changing. Sometimes you get a lot more bang for your buck when you exchange your money, and sometimes you have to exchange a few more euros, British pounds or U.S. dollars just to get by. That is because exchange rates are constantly changing, and it is these changes in exchange rates that enable you to make a lot of money in the Forex market.

Forex Trading Basics

The global foreign exchange market is the biggest market in the world. The 3.2 trillion USD daily turnover dwarfs the combined turnover of all the world's stock and bond markets.

There are many reasons for the popularity of foreign exchange trading, but among the most important are the leverage available, the high liquidity 24 hours a day and the very low dealing costs associated with trading.

Of course many commercial organisations participate purely due to the currency exposures created by their import and export activities, but the main part of the turnover is accounted for by financial institutions. Investing in foreign exchange remains predominantly the domain of the big professional players in the market - funds, banks and brokers. Nevertheless, any investor with the necessary knowledge of the market's functions can benefit from the advantages stated above.

Important Facts about the Forex Trading System

Forex is considered as a financial system on the foreign exchange. It allows the trader to purchase foreign stocks or currencies. The forex trading system is popularly increasing in the internet in leaps and bounds each day. It provides useful information about the companies wherever it is located. The traders stay informed so that they can make a wise decision when purchasing and investing their money. Several forex trading systems are allowing the traders to make withdrawals, online inquiries and purchases so that they can create additional wealth by using their invested money.

Knowing How to Trade in Forex

Do you want a very good career that has a potential to make you earn a lot of money? Do you want to enter a particular financial market but don’t know which one to choose?
If you answered yes to either of these questions, then the Forex market is right for you. If you want to make a lot of money, the Forex market can provide for you.

Tips and Tricks for Day Traders

Day traders Buy or Sell Stocks several times every day and close out all positions before the market closes.

The expectation of Traders is making small profits with as little risk as possible and they simply look for potential price movement Based on Technical Analysis.

Plan your trade. Trade as per your plan.

Select your Stock, Decide the Quantity, Decide the entry and exit price and Decide the amount of money you can loose if the trade goes against you.

Trading in Opening and Closing hours of the market is Risky but Rewarding.

Use a Stop Loss

Always trade with Stop Loss. Set Stop Loss Sell Order just below the low of the day or Support level and Stop Loss Buy Order just above the high of the day or Resistance level.

Never Trade too many stocks at once

Always trade in High Volume Index based Shares.

Select Three or five stocks for Trading.

Get the price movement between the bottom and top

It is not possible to Buy at the Bottom and Sell at the Top.

Try to trade between the Bottom and Top.

Buy a stock

Always buy a stock that is going Up. Buying level is just above the previous closing price.

Short the stock

Always sell the stock that is going down. Selling level is just below the previous closing price.

Don't average Your Position

One common mistake by Traders is averaging Loss making position. You must exit if the trade goes against you.

Take control of your greed

Book Profit and leave the trading hall and enjoy the day.

Take control of your fear

Cut your loss - Relax – Forget your loss quickly. Wait for next Opportunity. You can Win.

Keep records of your trading results.

Always record details of your trades and mistakes. Accept failure as a step towards victory.

Basic Rules of Indian Stock Market

Whenever Market is High It Will Fall

Whenever Market is Low, If there is no external Factor, It Will rise

Same Rules Applies To Stocks Scripts Also

For More Details Click on Rules

General Market Advice:

1. Never chase a stock.
2. Buy when markets are in the grip of panic.
3. Only buy fundamentally strong stocks, which are undervalued.
4. Buy stocks grown in top line and bottom line over the past years.
5. Invest in companies with proven management.
6. Avoid loss-making companies.
7. PE Ratio and Growth in earnings per share are the key.
8. Look for the dividend paying record.
9. Invest in stocks for sure returns.
10. Stocks have been the high yielding asset class over the past.
11. Stocks are an asset class.
12. The basic property of any asset class is to grow.
13. Buy when everyone is selling and sell when everyone buys.
14. Invest a fixed amount each month.

Trading Strategies

What is this all about?
The objective of trading shares is to produce above average returns on your money. Trading is very different to investing in shares, so forget anything you know about investing as it is probably irrelevant.
To trade shares you need a strategy. This strategy is otherwise referred to as a trading system. A trading system is a set of rules used to define your actions given any circumstance that might arise.
Trading successfully is all about removing emotion and following a proven strategy that will force you to profit. The moment you involve emotion or gut feel in your trading, you will probably lose money.
HomeTrader teaches people how to design their own trading system.