The foreign exchange market (forex or FX for short) is one of the most exciting, fast-paced markets around. Until recently, forex trading in the currency market had been the domain of large financial institutions, corporations, central banks, hedge funds and extremely wealthy individuals. The emergence of the internet has changed all of this, and now it is possible for average investors to buy and sell currencies easily with the click of a mouse through online brokerage accounts.
Daily currency fluctuations are usually very small. Most currency pairs move less than one cent per day, representing a less than 1% change in the value of the currency. This makes foreign exchange one of the least volatile financial markets around. Therefore, many currency speculators rely on the availability of enormous leverage to increase the value of potential movements. In the retail forex market, leverage can be as much as 250:1. Higher leverage can be extremely risky, but because of round-the-clock trading and deep liquidity, foreign exchange brokers have been able to make high leverage an industry standard in order to make the movements meaningful for currency traders.
Extreme liquidity and the availability of high leverage have helped to spur the market’s rapid growth and made it the ideal place for many traders. Positions can be opened and closed within minutes or can be held for months. Currency prices are based on objective considerations of supply and demand and cannot be manipulated easily because the size of the market does not allow even the largest players, such as central banks, to move prices at will.
There are several avenues for retail customers to make investments. Individuals can use investments instruments in financial markets by using long term goals or short term trading i.e. shares, options, derivatives, swaps, commodity, real estate, gold, silver, bonds etc., some of these instruments give an opportunity for people to make money. Indian financial market is still only 2+ decades old and requires lot of maturity.
Recently some of trading instruments are available in the market because of the online facility and many folks are using the technology to make additional money by trading in futures or cash market along with commodity. There are bound to be many changes going to happen in the coming years because of the stake taken in BSE and NSE by foreign exchanges and substantial developments are going to happen w.r.t technology and access to retail investors.
There are many new products will be launched in the financial market, which provides easy access for retail investors to benefit from the same. One such trading activity is FOREX, which is now accessible for many retail investors. Most of the folks are not aware of how to use this trading avenue to make additional money and the beauty of this product is that you can trade 24hrs which provides opportunity for folks who can do some bit of trading during later hours or after work or early in the morning. As we all know that FOREX trading is the biggest market globally and there are so many combinations individuals can hedge.
The project study is an attempt to delve into details of different strategies used in FOREX trading and apply some of the commonly used strategies to profit from this new instruments which is rapidly catching up in India.
The project study intends to address the following objectives
- Study types of currencies traded and how they are traded
- Study FOREX trading strategies and techniques
- Apply commonly used strategies for FOREX Trading
- Study FOREX Charts (US and UK Currencies are used for the study)
- Create a FOREX Trading account and apply Trading Strategies
- Conduct a survey to get retail investor perspective on FOREX