Basics of Currency Trading in India

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Trading in the stock market is gaining popularity rapidly. But did you know that trading in the currency market in India is also a highly lucrative prospect? As the name suggests, currency markets are where currencies of different countries are traded. It is also known as the Forex Market.

Currency trading has the potential to generate great returns. But it is important to first understand the basics of currency trading and the functioning of the currency market.

In this article, we will cover:

  • Guidance for Currency trading in India
  • Where do Currency Trades Occur
  • How Currency Trading Works
  • How to Trade in Currencies
  • Things to Remember

If you are interested in currency trading, then you can start by opening an account with Prabhudas Lilladher. The research team at PL guides clients on protecting their margins against price volatility and trading profitably. Click here to know more, or write to

Guidance for Currency trading in India

Currency markets are touted to be one of the largest financial markets in the world. It is a marketplace that facilitates the purchase and sale of national currencies. 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. Also, currency trading tends to be highly leveraged, due to which even slight fluctuations have the potential to result in significant profits or losses.

Where do Currency Trades Occur

There are two main types of currency markets – first is the Spot or Cash market. The second is the Derivatives market.

In India, currency trading occurs through the derivatives segment. Currency futures & options are traded on exchanges like the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and the MCX-SX. Currently, the forex market timing in India is from 9.00 a.m. to 5.00 p.m. Cross-currency trade continues till 7.30 p.m. Currency Trading is regulated by the SEBI and the RBI.

How Currency Trading Works

As a beginner in currency trading, you should note that currencies are always traded in pairs. The 7 permitted pairs for currency trading in India are: USD/INR, EUR/INR, JPY/INR, GBP/INR, EUR/USD, GBP/USD, and USD/JPY.

In each of these pairs, 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, while the 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. Note that 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.

EXAMPLE: If we consider USD/INR as an example, the USD is the Base Currency, INR is the Quote Currency, and the Value is ~80.

As a currency trader, if you believe the rupee will appreciate against the dollar, then you buy more rupees. Alternatively, if you believe the dollar will appreciate against the rupee, then you buy more dollars. If the exchange rate fluctuates as per your estimates, then you will make a profit.

How to Trade in Currencies

Trading in currencies involves significant risks and requires a good understanding of market trends and factors that influence exchange rates. Also, Currency Trading is impacted by geopolitical events, interest rates, and several other factors. Therefore, it is important to educate oneself and seek professional advice before participating in currency trading.

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

The benefit of trading in currencies with PL is that you get access to PL’s award-winning research reports and calls. PL’s industry-leading analysts publish reports on market trends in the short and long term after analysing local and global factors impacting prices. Also, PL’s signature Miracle Pattern report provides technical breakouts, levels and targets.

For its clients, PL provides dedicated Relationship Managers and Call and Trade facility. You can also trade online, with PL’s DigiTrade app.

Visit or write to for more information on PL’s currency services or account opening.

Things to Remember

The currency market in India offers an attractive investment opportunity. But you must keep a few key things in mind when trading in currencies.

Firstly, identify and understand your trading style. Decide whether you are a Day Trader, a Positional Trader, or a combination of both. Also determine the investment amount, your risk appetite, and investment horizon.

Secondly, choose a value-added financial advisor like Prabhudas Lilladher. PL will not only enable a seamless currency trading experience but also tell you what to trade, when to trade and how much to trade. PL’s research-backed calls help clients in making informed trading decisions.

Thirdly, be realistic. While currency trading has the potential to generate significant returns, there is no guarantee. So, be aware of the risks and be prepared for the trade going against your estimate. Never stretch yourself and be mindful of your objectives.

Lastly, understand the market, exchange rates, and various trading strategies as well as how to manage risk when trading in currencies.

PL’s qualified experts can help you create a trading strategy that aligns with your financial needs. To understand more about how you can start trading in the currency market in India, click here.

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