Binary trades are not permissible under the Foreign Exchange Management Act According to the RBI's Liberalized Remittance Scheme, a person cannot use the money transferred abroad for speculative purposes or to provide margin money for trading. There are chances that you may have come across advertisements of online forex trading platforms on social media. Many of them also advertise in the local Indian languages. The ad, typically, talks about how you can easily trade in the forex market and make quick money.
Currency margin calculation
Many of these forex trading platforms are popular around the globe. However, they are illegal in India. They execute binary trades. It means, the trader either gets a fixed amount or nothing. For example, you can bet on whether the US dollar would fall against the Indian rupee. If it does, you get a fixed amount.
All times are GMT unless otherwise stated.
If you lose, the platform keeps the money. Such binary trades are not permissible in India and many other parts of the world. Binary transactions are between the platform and the trader. There is no third party involved.
- The Best Time of the Day to Trade Forex.
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- The Best Trading Hours in the Forex Market;
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If you look at how stocks trading works; the exchange's role is to provide a platform that facilitates trades between the buyer and seller. Not only can this strategy deplete a trader's reserves quickly, but it can burn out even the most persistent trader. Unlike Wall Street, which runs on regular business hours, the forex market runs on the normal business hours of four different parts of the world and their respective time zones, which means trading lasts all day and night.
So what's the alternative to staying up all night long? If traders can gain an understanding of the market hours and set appropriate goals, they will have a much stronger chance of realizing profits within a workable schedule. New York open 8 a. When companies merge, and acquisitions are finalized, the dollar can gain or lose value instantly. Tokyo, Japan open 7 p. Japanese yen. Sydney, Australia open 5 p.
While it is the smallest of the mega-markets, it sees a lot of initial action when the markets reopen on Sunday afternoon because individual traders and financial institutions are trying to regroup after the long pause since Friday afternoon.
London, Great Britain open 3 a. Technical trading involves analysis to identify opportunities using statistical trends, momentum, and price movement. Currency trading is unique because of its hours of operation. The week begins at 5 p. EST on Sunday and runs until 5 p. Not all hours of the day are equally good for trading. The best time to trade is when the market is most active. When more than one of the four markets are open simultaneously, there will be a heightened trading atmosphere, which means there will be more significant fluctuation in currency pairs.
When only one market is open, currency pairs tend to get locked in a tight pip spread of roughly 30 pips of movement. Two markets opening at once can easily see movement north of 70 pips, particularly when big news is released. The best time to trade is during overlaps in trading times between open markets.
Overlaps equal higher price ranges, resulting in greater opportunities. Here is a closer look at the three overlaps that happen each day:. While understanding the markets and their overlaps can aid a trader in arranging his or her trading schedule, there is one influence that should not be forgotten: the release of the news. A big news release has the power to enhance a normally slow trading period.
When a major announcement is made regarding economic data —especially when it goes against the predicted forecast—currency can lose or gain value within a matter of seconds. The said OTC market is divided into three different types viz, spot, forward and futures forex markets.
Why the Forex Market Is Open 24 Hours a Day
Forex trading involves selling one currency in order to buy another, which is why it is quoted in pairs. Each currency in the pair is listed as a three-letter code - formed of two letters that stand for the region and one that stands for the currency itself. Major pairs - Highly traded. Minor pairs - Less frequently traded. There are plenty of ways in which a person can trade forex by simultaneously buying one currency while selling another in the same transaction.
Traditionally and for a long time now, forex trade transactions have usually been made through a forex broker.
But with the rising popularity of online trading one can easily employ the advantages of forex price movements using derivatives like CFD leveraged products, which enables a trader both, individual or institutional, to open a position for merely a fraction of the full value of the trade trading. Although the leveraged products can boost the profits, they can also magnify losses if the market moves against you which is why CFD trading is illegal in India. Given its liquidity in terms of daily trading volume, losing money is easier than actually making it.
Following are some of the strategies generally employed to the cause -. Price Action Strategy - The price action strategy is the most commonly employed strategy for Forex trading. It completely depends on the bulls or bears of the price action in currency trading and is typically useful in all kinds of market conditions. Trend Trading - In this type of strategy, the traders need to identify the movement whether upward or downward of the currency price on the basis of which they need to decide on their entry point.
Online tools such as moving average, stochastic, relative strength indicators, etc, are also available to aid the traders for the analysis. Counter Trend Trading - In this strategy, a trade is made against the current trend with pure hopes of making small gains and is dependent on the prediction that the trend will reverse.
Range Trading - In a range trading strategy, the trade is made in a specific range of currency prices and are needed to identify the favorable price conditions in which they can trade where the price levels are usually dependent on the demand and supply for the currencies. Breakout Trading - In this type of trading, a trader enters into the market at that point when the market is emerging out of a previous trading range, i.
Position Trading - Position trading is used by the seasoned veteran traders mostly and involves analyzing the charts at the end of the day. One needs to have a strong grasp over the fundamentals of the market to master this strategy. Carry Trade - The focus in the carry trade strategy is on the interest rate differential of the two countries whose currency is being traded. This involves selling out that currency which has a low-interest rate and buying the one which has a higher interest rate and hence is considered a rather successful strategy if executed properly. Any Indian, residing in the territory of the nation, or a company including banks and other financial institutions can participate in the futures market.
The foreign exchange market came into existence in India by as late as when the banks were granted permission to undertake trading in currencies by the RBI. Indian foreign exchange market as it exists today is well structured and conducted in a regulated-fashion by the RBI. The dealers authorized by the RBI can engage in such transactions. The forward market is active for a maximum period of six months in the Indian territory. In recent years, the maturity profile of the forward market has elongated, the credit of which goes mainly to the RBI initiatives. The link between the forward premia and interest rate differential appears to work largely through the leads and lags and it can be observed that the forward markets are also influenced by importers and exporters through a grant of credit to overseas parties.
Following chart can be referred to understand the time-zone division of the Foreign Exchange Market abbreviated as a Forex market:. Even though a hour market offers a substantial advantage for many individual and institutional traders, it is not deprived of certain pitfalls. Discussing one of which is that to monitor a position for such long periods of time is highly painstaking and near impossible for any trader which implies that there will certainly be trading times when opportunities are missed.