Trading the World’s Currencies Requires a Fundamental Perspective

Global investors are a fickle lot.  If one investment medium is not delivering the desired returns, then many broadminded investors often look for opportunities elsewhere.  In the past decade, one arena that has attracted a healthy number of new recruits is currency trading.  New and improved trading software and a flexible schedule that allows for trading nearly any time of day are the primary draws.  Forex trading, however, involves high risk, and many hours of preparation and specialized training are prerequisites if you wish to be successful in this genre.

Experts will tell you that there are three factors for success – knowledge, experience, and emotional control.  The latter is often the most difficult to acquire, since it has more to do with your personal psychological programming than anything else.  Experience can come from practice trading on a free “demo” forex account that uses “virtual” cash and real time quotes to aid your learning the vagaries of the forex market and developing strategies that work.  As for knowledge, seminars and tutorials are mandatory, and you should seek out a “mentor” to guide your early development.

One key area of your educational process will be devoted to what are known as the “fundamentals”.  Fundamental data, whether economic, political, financial, or crisis related, are what move the market.  Developing your trading strategy starts here.  Let’s begin by taking a look at the Indian Rupee versus the U.S. Dollar for the past year in the chart below:

 Forex Chart

The “Blue” line represents the pricing behavior for the Rupee, reflecting a 20% decline in value over the period.  What fundamental factors led to this decline?  By understanding the past, you can learn to appreciate what needs to be known when you wish to forecast what might happen in future.  Here are a few of the causes for the drop in value:

  • Interdependencies: In today’s modern era of globalization, our economies are interconnected in so many ways that it is sometimes difficult to discern the individual forces at play.  Traders deal with this phenomenon by searching for “correlations” to guide their fundamental interpretation.  The pricing behaviors for the five items presented are very similar, with slight adjustments due to local considerations.  India’s economy is very dependent on the global economy in general, and Copper is one proxy for the health of the global economy.  As Copper fell, it dragged the Rupee down with it over time.
  • Economic Data: Any government releases related to GDP growth, government spending, investment flows, trade balances, and foreign exchange reserves are just a few of the factors in this area that can move forex rates in the market.  GDP growth in India has slowed to 5.3% over the past year, imports have been greater than exports, and investment flows have been outward, all reasons for the general decline above.  Inflation has also risen to 7.6%, thereby reducing the purchasing power of the Rupee and its value versus other currencies;
  • Financial Data: Interest rate changes and monetary policy from the central bank are key components here.  The RBI recently reduced rates in April by half a point.  This reduction accounts for the modest drop in April when other currencies and stocks remained flat over the month;
  • The European Debt Crisis: India has historical trading ties with Europe.  Any drop in their demand for imports will ripple through all economies of the world, but more so with respect to India.

These items are just the tip of the forex “iceberg”.  Be sure to invest the time up front, if you wish to reap forex dividends down the road.

Open a Forex Trading Account in India – FREE

Ever thought of Forex trading as a means of livelihood? Probably not. Most Indian kids are generally all geared up to take over their family business or take up a job. But Forex trading is something that can make you extremely rich! Why? Indian currency is looking good and because of that, trading in Forex has a whole lot of possibilities

Open FREE FX Account: Click Here >>

I mean think about it, the Indian economy is booming, it hasn’t been affected by the recession and for the past two decades the financial market has been running without any hitches! In fact, NRIs are entering the world of Forex trading in India in droves!  But hang on; before you do decide to jump headlong into this business, it is a good idea to do some background research.

What to Do

You should have thorough knowledge of the Indian Forex market. The best way to do this is via a free course online. Now a lot of people will charge you money for this, but I can tell you here and now that there is absolutely no need to pay money for this knowledge when you can get this for absolutely free online!

What this course will do is acquaint you with the relationship between the Indian National Rupee and the US Dollar. This will speed up the process of Forex trading. This market is on the path to full-fledged progress. The Indian rupee is reliant on the National Stock Exchange based in Bombay and it is also enlisted in the Dubai Stock Exchange.

It is a good idea to approach a broker. Doing Forex trading all on your own is virtually impossible, not to mention risky. This will help you activate a brokerage account and also to open a personal trading account. You should approach only respected brokers who have a good international reputation and credibility. Whoever you choose, ensure that he has the capability to smoothen your entry into the Indian Forex market.

You could also choose to approach American Brokers who will have the ability, not to mention the competency to help you enter the domestic Forex market in America. They will provide you with all the assistance you need to set up a trading account in the Indian market.

So how does one get a profit by trading in Forex? It depends on the global economy. There are certain factors which play a role and these include, GDP (gross domestic product) of India, face value of the currency and growth inflation as well. Not to mention the inflow of foreign currency into the country. At all times, do make sure to keep close tabs on the Indian market. This will surely help you to make a great profit.

Be Careful

Before opening a Forex trading account in India, it is a good idea to be really analytical. Look at every point from every possible angle. This is really not a simple thing to do and you need to give it much consideration. You also have to look at all the stats and figures in order to get success in your field. Don’t rely solely on gut feeling.

But gut feeling also does play a major role. Buying and selling largely depends on your guessing abilities and abilities to predict ups and downs in the value of foreign currency. You should definitely be equipped with a plan of action that will help you make your fortune. In order to do this you need to do a lot of research. Forex trading is extremely rewarding, but only if you give it enough importance!

Foreign Exchange Market in India – Overview about the foreign exchange trading in India

Taking cue from the rise in popularity of forex trading the world over, the Indian foreign exchange market is also growing in leaps and bounds. At present, the annual turnover of foreign exchange trading in India exceeds a whopping $400 billion. The volumes included inter banking trading as well as futures and forward trading in foreign exchange. Transactions are also made on the basis of swapping currencies and interest rates as well.

Mumbai

The principal place where forex is transacted in big volumes is Mumbai. The market involves intermediaries, buyers, sellers and the monetary authority of India. Apart from Mumbai, the other centers where forex is also traded are Kolkata, Chennai, New Delhi, Cochin, Pondicherry and Bangalore. Even though the markets are not linked as they are in other parts of the world, they do perform collectively.

Authorized dealers

The Reserve Bank of India or India’s central bank regulates the market using the help of the exchange control department of the bank. Only the authorized dealers in foreign exchange are allowed to participate in trading which also included accredited brokers as well. The entire transactions are governed by FEMA or the Foreign Exchange Management Act of 1999, which is an updated version of the Foreign Exchange Regulation Act or FERA.

Regulations changed

Apart from the usual authorized dealers and brokers, designated hotels, government shops, authorized money changers are also allowed to accept foreign currency. If you are thinking of the systems in operation in other parts of the world, India is slightly lagging behind. On certain conditions, the IDBI or the Industrial Development Bank of India and the Exim Bank are also allowed to hold foreign currency. The set-in-stone policy in foreign exchange holdings and trading has been relaxed in keeping with the changing scenario the world over.

India bracing up

Initially, FERA was bright in to regulate the inflow of foreign capital, but in later decades as the economy opened up, some changes were brought in. At a later stage, the government felt the need to conserve foreign money, and hence, the changes in the act were brought about. Moreover, with the opening up of the economy, there came an urgency to change with the times. With the economy getting more global in recent years, India wanted to brace up to the challenges ahead and went in for more interaction in the financial markets the world over.

Hedging and swapping

Initially, Indian investors were also not aware of different types of trading in forex like futures and derivates that could lead to more sustained profits in the long run. They are now hedging, swapping and going for options trading these days. Forex can also be traded online these days and investors are also finding out the benefits in currency trading. Earlier, they had very few options to make money from speculative trades with commodities and stocks being the only available options.

Best time to trade

The Indian forex traders have also come to realize that a small ripple felt in a far corner of the globe can affect markets in India. We are more interconnected and no country can remain unaffected from the changes happening in the world these days. If you are planning to invest in forex trading in India, this could be the best opportunity as things have kick started and would be  on a roll soon. Currencies are also interlinked and any changes in a major currency price can affect other weaker currencies of the world. Forex trading takes benefit from the rise and falls in prices of currencies.

Tips on Foreign Currency Trading in India’s Exchange Market

This is one mind boggling topic for forex traders in India to talk about. Even the experts find it hard to make a proper path in order to ensure success in the Indian foreign exchange market where currencies are traded 24/7. Online Forex trading in India is one such thing that can never give a concrete answer of a winning situation to even those who are really proficient and quite experienced as well. If the trends are studied in detail then one would find a spot on position for forex, but at the same time the currency marketing moving in a completely opposite direction. But then it is possible for a good forex trading system to lessen the gap between reality and the projection, and they happen to be fairly accurate.

If you want to make money by trading, and if you do not understand anything of this then you can give up your dreams of making money, rather you should fear that you do not end up being a crook. Risk management is one art that you are expected to master if you wish to trade in forex. This is one speculative market and if you can feel the nerve of it then, you are into it my friend and there would be no stopping on your part. You will not get to feel the deviation if you are into a very good forex trading system.

As the recession has crept into the scenario, day by day it is getting difficult for people to keep up with their jobs. For properties and small businesses, the foreclosure rates are going up each and every day and this has led many people in India turn to online methods of making money and this is really a fantastic way to make money quickly and in large amounts. Since currencies are most vulnerable during periods of recessions, so naturally they are found to be utilized the most during trading.

So with the IT market booming in India it is nowadays possible for Indians to do a fairly good job in forex trading. They have really understood the fact that in order to make money by getting involved in currency trading one really does not require sitting in front of their computer screen all through out the day. There are systems in India that would help you big time to do forex trading in the right way. It would help you set up a stop loss and help you determine both the buying and the selling price actually.

In order to maintain the upward trend of the India forex market for making profit you really do not require the market. You can make money irrespective of the fact whether the computer is on or off. While system is involved in taking care of your chosen modes of transactions, you can jolly well do you’re other works.

During the unpredictable times, when the whole world is practically upside down in terms of economy, you really do not need to feel dejected because you still have the options of making money. It is really not an issue. The requirement can be well ensured when trouble is looming at the forex market.

The FX trading software is wonderful software that is used by people who trade in forex transactions. The charts and figures will all be in front of your eyes to help you analyze and then take your decision. There are lots of forex trading schools that are coming up these days in India. Coaching classes are available to train and teach people who are interested in forex trading in India.

The experienced traders strongly believe that without proper knowledge it would be really hard to keep up with the trends.