Currency trading, often referred to as foreign exchange or Forex, is the purchase and sale of currencies in the foreign exchange market, with the objective of making profits. It is the largest market in the world, with nearly $2 trillion traded on a daily basis. Liquidity is the main factor that differentiates currency trading from other types of trading.
Currency derivatives are forwards, futures, swaps and options contracts by which youcan buy or sell specific quantities of a particular currency pair on a predetermined future date. It is similar to Stock Derivatives trading, except, the underlying assets are currency pairs instead of stocks. Currency Derivatives trading is either done in the Foreign Exchange Market or Over-the-Counter (OTCs). Banks, corporations, importers and exporters are major participants of currency trading in India.
Why Currency Derivatives?
If these benefits look appealing to you then you can enter an agreement with another trader and reap the benefits of trading currencies through derivatives. One thing to keep in mind is that, derivatives can be complex instruments to interpret. To enjoy the benefits of using derivatives it is better to take advice from a professional- when and how to use them. Myforexeye Team provides guidance to its clients on how and when to use derivatives and thus achieve the desired outcome.
21 Jul 2020 06:13 PM
A country’s exchange rate and its imports and exports hold a complicated relationship as there is a constant feedback circuit between the way a country’s currency is valued and the international trade.
29 Jun 2020 05:35 PM
Dynamic hedging is a foreign exchange risk management strategy that allows businesses and individuals to readapt their hedging positions to evolving market conditions by providing flexible solutions to protect investments from exchange rate risks.
19 Jun 2020 05:01 PM
Management of Currency Exchange Risk is of paramount importance during turbulent times, like this pandemic. The currency fluctuations are very volatile and cannot be predicted as the circumstances are uncertain.
06 Jun 2020 03:59 PM
Outrights, in FX markets refer to the type of transactions where two parties agree to buy or sell a given amount of currency at a predetermined rate, on a specified date in future.
08 May 2020 05:21 PM
Converting one exchange rate into another at a particular price makes transferring rates. Ideally all nations should be treated as equal and there shouldn’t be any exchange rate applicable which would mean to have a universal currency.
24 Apr 2020 03:08 PM
Managing risk in a financial market is required to keep a check on the adverse movements in the instrument of the market. Particularly in the foreign exchange market.