The main goal of a trader in the market of FX India is to make profit from the fluctuations in the market. The variation in the exchange rate is something that is very much required for the traders to gain profit. Almost majority of the activities in the forex market are for the speculative purposes. Only a few percentage, out of the overall activities form hedging. Another peculiarity of trading in FX India is that there is nothing called a direct trading in this market. Trades are not done by physically exchanging currencies but are done based on a contract. The contract needs the agreement of both the parties related with the trade on a particular exchange rate. Once you have agreed up on the contract you need to satisfy the obligations that are related with the contract. The contract may require a particular party to sell a decided amount of currency and the other party need to buy the same amount of the currency. With the end of the contract it is possible to estimate the profit or loss that is obtained from the trade. The market of FX India has relay turned out in to a hub for the people who aim to make large amount of profit.
Element Associated with a Deal in FX India
For entering in to a deal you and your market maker should agree up on a contract. There is nothing like physical delivery of currencies. The contract based on which the trading is done comprises of the following things. The first and foremost thing is the currency pair. Currency pair comprises of a base currency and the quote currency, with which the whole trading is done. Base currency is the actual currency that you trade on the basis of the volume of quote currency for a single base currency. The next important factor is the initial investment, which is the amount that you need to deposit in the forex market for entering in to a trade. The important factor involved in forex trading is the exchange rate, this is the rate based on which currencies are exchanged in the market. In certain trades, time frames also have emerged as an important factor of concern. Most of the trades last only for a day and there are provisions available for extending the trade for one more trade. The trading in the forex market is done based on currency pairs.
Exchange rate is the factor that based on which the currencies are traded in the forex market. Most of the currencies in the forex market are traded against USD. The four currencies that are traded against USD are franc, pound, yen and euro. The exchange rate can be defined as the amount of quote currency that needs to be paid for a single unit of base currency by a buyer. Considering the seller exchange rate is the amount of quote currency received for a single unit of base currency.
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