How to Trade in Forex

Before knowing the steps of trading in Forex,  we will understand the Forex trading. Forex trading is trading of foreign currencies. This trading is done in international foreign exchange market. In Forex trading, both buyers and sellers deal for getting the profit in this trading. In this trading, buyer buys other country's currency by paying its payment in his own currency at the current foreign exchange rate. So, more correct, you will estimate the future foreign exchange rate, more you can get profit in this trading. It is 24 hours trading market. UK and US are in the top of trading in this market.

Forex in India Means Buy or Sell Foreign Currency with Your Indian Currency

From a small businessman to large scale banks and MNCs deal in Forex marketing. Some invest it just for speculation and other for hedging. Today, there are lots of online portal which are helpful to deal in this market just with some clicks. As per Wikipedia, "Per day dealing in this market is $ 150 billion"

Following are the steps to trade in Forex :

1st Step : Calculate the Total Investment in Forex Trading

Before Forex trading, one of important step which you have to take, is to calculate the total investment in Forex trading. Forex is big market where you can buy or sell any currency. Your country's currency will be called quote currency. You can start Forex by buying other country's currency. That currency will be base currency for you. For example, you can buy $ 1821.33 with your Rs. 1,00,000. For buying dollar, your given price will be bid price. Now, this is your investment. You can get return on this by selling this dollar in any other currency. For example, you can sell same $1821.33 dollar in you will get only 1391.92 Euro with $1821.33. For example, after two days, if 1 euro will equal to 2$, you will get huge profit because today is one euro is equal to $ 1.31. So, more money you will invest in this business, there are more chances to get more profit. If you are starting this trading, you must start from low amount.

2nd Step : Find Forex Broker 

If you want to buy or sell shares, you need DEMAT Account. Your dealer will buy and sell on your behalf for getting commission from you. Like this, for buying or selling currency, you need to find the Forex broker. You have to open your online Forex Account. In India, FEMA regulate the Forex trading in India. FEDAI is also self regulatory body in India. If you have find a broker online. Try to search his physical address. If the website is not providing his official address, never create your account with this broker because after breach of your agreement to whom you will make responsible.

Outside India, following are oversight bodies include: 

 United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)

  United Kingdom: Financial Services Authority (FSA)

 Australia: Australian Securities and Investment Commission (ASIC)

 Switzerland: Swiss Federal Banking Commission (SFBC)

 Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)

  France: Autorité des Marchés Financiers (AMF)

Before opening, Forex trading, you have to follow some formalities, after this, your personal trading account will be started.

3rd Step : Start to Do Forex Business 

Like a perfect businessman, you have to start the Forex trading. For buying or selling decision, you have to analyze the forex market.You have to study, which currency is appreciating and which currency is depreciating. You have to go to past and find whole trend. You also have to study of the economy of country. If any country's economy is growing at faster rate, you should buy that country's currency. In future, it will give more profit.

Important : { This written lecture is the part of CS Accounting Notes}


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Accounting Education: How to Trade in Forex
How to Trade in Forex
Accounting Education
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