What is Currency or Forex Trading | How To Trade in Currencies | By Invest Therapy

What is Currency Trading:

Currency Trading or Forex Trading is a type of Trading where a buyer or Seller buy or sell Currencies in pair. For example today the USD stands at 74.89 Indian Rupees. If the trader expects that the dollar price rise against the Indian rupee then he buys more doller. And if he expects dollar price fall against Indian Rupees, he will buy Rupees. The trader must always choose a pair of Currencies for Trade like INR/USD, INR/EUR for example. 

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Advantage of Currency Trading:

• Transection cost for Currency Trading is very low and affordable even for Beginner Traders in the Trading space.
• There is no middleman in Currency Trading. Your Profit is yours. However, you have to pay taxes on your earning.
• Currency Trading does not involve the risk of losses due to insider trading.
• Currency Trading is immediate trade, you don't have to wait for execution and settlement of the trade.

The function of Currency Trading:

In order to trade cautiously with Currency, it is Important to familiarise yourself with the function of Currency Trading that makes it unique:

Transfer: 

One of the main functions of Currency Trading is to settle payments by transferring foreign currency to one country to another. It converts one Currency to another and provides international transactions.

Credit:

Currency Trading also provides credit in a matter of international trade. For example, an importer can utilize credit from the Currency Trading and buy foreign currency and pay off later.

Hedging:

Continuous fluctuation in the exchange rate can cause significant damage to parties and industries. Therefore, the Currency market provides the facility to such parties to hedging against foreign exchange risk.

How to Trade-In Currencies :

Currency Trading always involves selling one currency in order to buy another. Which why Currencies always traded in pairs. the price of a currency pair is how much one unit of the base currency is worth in the quote currency - for example, if INR/USD is trading at 74.89, then one dollar is equivalent to ₹74.89. 

Below are some points to know how to Trade-In Currencies:

• First, you need to create a Trading Account. You can start with an online Currency Trading Account from the help of Discount Broker for free and begin Trading right away.
• Do your research. It is Important For Traders to Know what to buy or sell and when to buy and sell. Watch trends regularly. For example, if the Rupee price is falling against dollars price then it is best to buy Rupees and sell dollars. 
• Take a test drive. It is important to test your skill when trading in Currencies. Before opening the forex (Currency) Trading account try the trial or demo Trading account available on your Broker app or website to make your mistake with virtual money to find your way to ticker symbols before going live.
• You are very successful from your test drive, you are probably very positive and want to start with a big amount as you navigate your Currency Trading Account. However, is best to start with a small amount. Any trader who has traded in Currencies for the respective amounts of years will tell you that always start Trading with a smaller amount and never put all your amount in one trade.
• Set up a stop loss or limit order with your Broker. If your losses cross the set amount then all positions in your Currency Trading will be closed immediately which means no further trade for that day. You can limit your losses by setting this up.

How to Choose Broker For Currency Trading:

Open Account with a Broker that has a good track record and ton of experience. Below is some point you have to keep in mind when Broker for Currency Trading:

• Choose a Broker who's Account Opening Charges carefree.
• Online Currency Trading Account.
• Brokerage track record.
• Demo Trading Account availability.

      The Currency market also is known as the foreign exchange market is one of the largest and most active markets in the current age. Making the right Reade in the Currency market makes a huge profit for the trader. Like other Investment Currency Trading also needs the right Trading Strategies and a good amount of time and patience. Many Broker gives the benefit of practicing with the demo Trading Account. You can make mistakes with demo money until you gain enough experience and confidence to trade in the Currency market with real money.

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