The Forex market is another place other than equity and commodities where traders make money with huge volumes of trades every day. Yes, currency trading is popular globally due to differences in the value of money of different countries and the price fluctuations of these currencies giving an opportunity for the people to trade and earn some extra money.

Compared to the equity market, the forex market is completely different in terms of time of operations, trading instruments settlements process etc. In the forex market, futures contracts are traded, and there are no such things as delivery of shares similarly there are various things that make the currency trading completely different from equity and commodity.

What is Forex Trading or Currency Trading?

Forex trading or currency trading in the Forex market is the simple process of buying and selling the currencies of different countries. The currency trading in the forex market is conducted electronically over the counter (OTC).

Also Read: Currency Trading: What is Forex Trading & How Does it Work

OTC means all the transactions are done through computer networks between traders from anywhere and must have the trading software on a computer system or smartphone with internet connectivity to perform the transactions in the currency market.

If you talk about forex trading globally, you can find different types of participants involved in the buying and selling of the currencies. But in the Indian forex market, the major participants are hedge fund houses, investment bankers, comprise banks, central banks (RBI) other types of institutional or non-institutional investors and retail forex brokers.

Also Read: Advantages and Disadvantages of Forex Trading: How to Start

What are the Most Important Things in Forex Trading?

In the forex market, you will find mostly the developed nations' currencies like the USD and EURO are traded in combination with currencies of other top developing nations. If you are looking to start forex trading you need to understand various things so that you can perform the transactions successfully without facing any technical problem in trading.

10 Important Things to Know About Forex Trading

1. Define Your Goal and Trading Style

Before you start trading in the forex market you need to define your goals, means what is the purpose of entering into the currency market and your approach towards the currency market. You should know your trading style and how much risk you can take while trading in the currency market. A pre-defined goal and the right trading style will help you in trading.

Also Read: Trading or Investing Which is Better and More Profitable

Moreover while creating your position in currency trading, how much time you can give for trading and according to that you should define the entry and exit points. As per your trading plan, you can give time and avoid overtrading. Defining your goal and trading style will help you to have a balance between the time you spend in trading and other activities.

2. Right Combination of Currency Pairing

Choosing the right combination of currency while trading in the forex market is another important factor, you need to consider. Choosing the right pair of two currencies for trading will help you get the right returns. As the pair of different currencies behave differently you must be aware of the behaviour of each currency individually and when paired.

Also Read: Equity or Commodity which is better for Trading or more Profitable

The combination of popular currencies like EUR/USD, USD/JPY, GBP/USD and INR/USD in India are highly traded in the market with narrow spreads. However, there are other currency pairs you can choose for trading. But keep in mind that each pair has its volatility and characteristics depending on the demand and supply in the currency market.

3. Trade with the Right Forex Trading Strategies

While trading in the forex market, trading with the right strategy is important to make your transaction profitable. From intraday trading to scalping, swing trading and trend trading, there are many trading strategies you can choose for currency trading. But make sure to choose the right trading strategy that can work profitably as per the market trend.

Also Read: USD INR Options Trading Strategies Beginners Guide to Trade

However, there is no such strategy that can guarantee to give you a 100% return. Even if most of the profitable strategies do not always work you can say there should be a profit and loss ratio of 65% and 35%, so that you can earn some money. To make your trades profitable you can use the right tools with the right techniques through technical analysis.

4. Keep Yourself Educated and Updated

The currency market is one of the highly fluctuating markets due to worldwide non-stop trade and various factors affecting the currencies of different economies. Though there are multiple factors that affect the currency price, right here while trading in the forex market you need to keep yourself educated or updated with the news that can affect the currency market.

Also Read: Factors Affecting Foreign Exchange Rate: Why Currency Fluctuates

Learning and educating yourself about the currency market and keeping an eye on various economic activities that can influence the price of a currency will help you to trade wisely. No matter how educated and experienced you are, there is no age limit to learning. So keep yourself educated and updated with currency-related all types of market news.

5. Be Aware of the Types of Risk Involved

Trading in the currency market, there are various types of risks involved that you need to understand. The forex market is highly volatile and can move in any direction with any sensitive news spread in the market. Forex market is open 24 hours a day and it is not possible to keep an eye 24-hour on your trade but be aware of the risks involved in trading.

Taking the risk involved in such trades is another important factor that differs from person to person. How much risk you can bear or how much money you can afford to lose. However, to minimize the risk always use the stop-loss while making any trade position in the currency market. This will help you minimize the risks and losses that you can incur in currency trading.

6. Control Your Emotions in Forex Trading

While trading in any financial market including the stock market, commodity market and forex market, you have to keep control of your emotions. Some traders take lots of stress after creating a position in the currency market that should be avoided as in such situations you can make the wrong decision or early exit while booking the profits or minimizing the losses.

Also Read: What is Profit Booking in Stock Market: Rules & Best Strategy

A biased decision while trading not only in the currency market but in any financial market can affect the profitability ratio of your entire trade. Hence, while trading in the forex market, keep your emotions aside and make unbiased decisions after correlating the technical and fundamental factors that really affect the price of the currency of the different countries.

7. Keep Patience Trading in the Forex Market

Patience is required not only to trade in currency but also in equity,  commodity or any other assets trading with fluctuation in price at every movement. While trading in the currency market you need to learn a lot of things like understanding the forex market, the correlation between different currencies and how the market reacts to global or country-specific market news.

Also Read: Equity or Commodity which is better for Trading or more Profitable

All you can learn and earn for the time being, and that will be possible when you keep patience after entering into the forex market. Moreover, after taking the trade positions in the currency market you need to keep patience till your position becomes profitable. Don't make any decision in haste and wait for the right time and situation to exit from trade.

8. Avoid Free Tips from Unreliable Sources

There are many unauthorized channels and groups or communities running on social media platforms giving free tips and recommendations to trade in the currency market. They use WhatsApp or Telegram groups to invite traders to join their channel and give free tips and recommendations to create positions in the currency market.

Relying on such free and unreliable tips can be dangerous for you, as they are not registered with SEBI or with any other Government-appointed authority to give such tips. And sometimes unfortunately when some of their tips work and become profitable, they ask to pay a subscription fee to continue getting such free tips. You need to avoid such tips.

9. Choose the Right Trading Platform

Choosing the right trading platform for the currency market is one of the very important factors you need to keep in mind. Apart from online trading applications, your trading partner should have fast documentation procedures and good customer service that can help you open your trading account and solve the issues you face in trading.

Also Read: How to Choose the Best Trading Platform in India: Points to Check

The online trading platform must show the currency market data with live feeds and currency market related to other information and news. There should be an advanced charting system like TradingView with all the tools and techniques for performing the fundamental analysis and technical analysis for researching the currency before trading.

Also Read: Technical Analysis vs Fundamental Analysis: Which is Better

10. Perform the Technical Analysis for Trading

In the equity market, you can buy stocks for long-term investment or trade with short-term profit gains. And here you have to use both technical analysis and fundamental analysis. But in forex trading, you need to mainly rely on technical analysis. Yes for intraday trading or short-term trading using technical analysis is a very important factor.

Also Read: Why is Fundamental Analysis Important for Investing in Stocks

Using the technical analysis you can analyse the candlesticks charts, draw the trend line, identify the trend or support & resistance or use the Fibonacci retracement and other best technical indicators to know the buying and selling levels of the currencies.

Also Read: How to Read, Analyse& Use Candlestick Chart Patterns for Trading

Here, if you don't know how to perform the technical analysis you can get help from experts like technical analysts who have the knowledge and experience to perform such tasks professionally and more efficiently helping their customers to earn profits.

Also Read: Is Technical Analysis Useful or Useless or Enough for Trading

How to Start Trading in the Forex Market in India?

To start trading in the forex market you just need an account in a bank and a trading account with the broker providing the trading services with an online trading platform to perform the transactions in the forex market. And to open the trading account with the registered Broker you must have the identity and address proof documents to complete your KYC.

Also Read: How to Open Demat Account: Benefits and Documents Required

It is not necessary for the broker should be registered for forex trading but it can be a full-fledged broking company providing investment and trading solutions in equity, commodity and currency markets. Here you need to find the right trading partner that can meet all your requirements in one place with the best trading app at the cheapest brokerage fees.

Moneysukh is one the best discount broker in India offering the best trading platform for currency trading, equity and commodity trading. You can open your trading and demat account here and enjoy the best-in-class online trading facility for the forex market, commodity and stock market with options to invest in ETFs and Mutual Funds. 

Also Read: How to Choose the Best Discount Broker in India: Points to Consider

Moneysukh has all types of market experts with a team of research analysts to perform the technical analysis and fundamental analysis in the equity, commodity and forex markets. Here after opening your trading account, you can get free tips and recommendations to create long or short positions in currency or commodities and stock market.

Also Read: What is Short Selling & How Does it Work: Is it Good or Bad

Apart from tips and recommendations, you will have free access to read research reports on the economy, sectors and company-specific reports or IPO updates and result analysis with a valuation of stocks to buy, sell or avoid the stocks and other assets. So what are you waiting for if you are looking to trade in currency market, start from here your trading journey?

Also Read: Difference Between Trading and Investing in Stock Market