Know Is forex trading profitable?. Also Know How profitable is forex trading. Foreign currency markets are the largest financial markets in the world. Trading in foreign currency markets averaged $5.09 trillion per day in April 2014 and this number has grown by a reasonable percentage by 2022. Forex Trading has picked up steam in India as well.
However, people are a bit more hesitant in trading in the currency markets as compared to equities and mutual funds.
To test whether Forex Trading is profitable or not, we look at what all is really involved with Forex Trading and their objectives.
Furthermore, Forex Trading apps can play a vital role in helping you trade in this segment.
The major participants of the currency market in India are government and central banks, banks and other financial institutions, hedgers and speculators. While banks and governments participate in the currency market for regulatory and economic purposes, hedgers and speculators are fully involved in the currency market due to profit making. Is forex trading profitable
Is forex trading profitable | How profitable is forex trading
Let’s see how hedgers and speculators make their profits from the currency.
If one is doing business in other countries and wishes to protect oneself from unwanted fluctuations in currency, one can take a proper position in the currency markets and prevent potential losses.
For example, if an importer believes that the USD/INR is appreciating and has certain payments due at a future date, he may buy USD/INR to hedge foreign currency exposure.
Similarly, if something is exported and it wants to hedge its foreign currency exposure, it can hold its future receivables. So, in this way, Forex Trading is profitable and really essential for trading and traders.
These are the people who speculate on the short-term movements of the currency based on macroeconomic and microeconomic factors. They take their position according to the currency market situation and get profit if the currency moves in their expected direction.
Even if the currency starts moving in the opposite direction, they always have the option to close their positions as soon as their predetermined stop loss is reached. It is highly recommended for all traders to set a stop loss before entering each trade as it is always better to take some minimum acceptable level to avoid major losses.
Example of Speculators: One can buy USD/INR if one expects that oil prices are going to rise in the near future and will impact India’s import bill. This is because one is expecting that the value of INR will go down in relation to USD.
Similarly, if there is news of heavy investment from FIIs, there is an expectation that the INR will appreciate against the US Dollar. In this case, one can make profits by selling USD/INR.
In these ways, Forex Trading is beneficial for speculators. For this, one needs to be completely up to date with the news that may be related to the currency markets.
Another way the currency market is profitable is for traders who can find arbitrage opportunities in the currency markets. Arbitrage opportunities are a completely risk-free way to profit from any market.
Although these opportunities are rare and go away quickly, if caught, one can make decent profits by taking advantage of the different markets and exchange rates of one currency in different exchanges.
The leveraged currency market has the potential to make more money trading than anyone can actually account for.
is forex profitable. For example, a leverage of 1:10 would mean that everyone can trade for ₹10 that is actually in one’s account. This is due to the convenience of margin. Instead of paying the full amount, one can trade by paying a % value called the margin amount.
Though we can say that Forex Trading is profitable due to margin, it is a double edged sword. If the market starts to move in the opposite direction, wipe out a trader’s entire account to mark for a market loss. This is why setting stop loss is essential before entering trading.
Foreign exchange trading profitable
Like any other type of trading, Forex Trading involves some risk. But if you are into certain professions, Forex Trading becomes a necessity of sorts. Forex Trading is definitely profitable if done correctly with good strategies and discipline.
Having said that, it is highly advised that you learn some of the top performing Forex Trading strategies in India and then take your step in the market.
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Best Forex Trading Strategies
- Price Action Trading
- Range Trading Strategy
- Trend Trading Strategy
- Position Trading
- Day Trading Strategy
Read More – Forex-trading-strategies
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