You can trade in currencies at the foreign currency exchange. It is the decentralized global or over the counter market for trading in currencies. Due to increase in the foreign investments and international trade the value of currency keeps changing. You can benefit from the changes in the foreign exchange.
In India the currencies are traded against the Indian rupee. Currency trading in India has major currencies like USD, GBP, JPY and EUR. The currencies are always traded in pairs at the exchange. You can buy, sell or exchange currencies at the exchange. There are many benefits of trading in currencies. They are as follows;
- As the market is highly competitive the brokerage fee is low.
- It is a very advantageous by-product of high liquidity.
- The transaction cost is low and in large delas the spread could be very low.
- In the futures market the exchange determines the size of the lot or the contract. The contracts are fixed in size. This allows the traders to trade in multiple slots.
It has high liquidity which means that a trader can enter or exit the market at will under almost any market condition.
Foreign currency exchange
The foreign currency exchange is also called the FX or the forex exchange. International banks are the main participants at the exchange. The other participants are government and central banks, commercial banks, financial institution, investors and currency speculators.
The forex exchange does not set any absolute value of the currency. It determines the the relative value of the currency by setting the market price of one currency if paid for with another. Currencies are always traded in pairs at the exchange. Each currency pair makes a trading product. For example EUR/USD, USD/JPY, GBP/USD and more. The first currency is called the base currency and is quoted relative to the second currency called the counter currency. The market convention is to quote most of the exchange rates against the USD with US dollar as the base currency.
The forex exchange has high trading volume and is the largest asset class in the world leading to high liquidity. It assists in international trade and investments by allowing currency conversion. It supports direct speculation and evaluation relative to the value of the currency. It works 24 hours except on weekends.
You can trade online in currency if you have an online account. Due to the Internet there has been a huge surge in the online currency trading. Investors and individuals can also trade in currencies online.