Currency trading is the process in which international currencies are bought and sold. Many financial institutions, banks and currency trading brokers in India indulge in this activity. A basic example, can be the trading of currencies between dollars and rupees. Those who deal in currency exchanging make a profit based on the variations in market, which changes the currency rates from time to time. On an estimate, $ 3 trillion worth of currencies is exchanged on a daily basis. The FX markets are up and running throughout the day, which is possible because of the global cooperation between the traders. At the end of the day, traders in Asia give their open currency position to their counterparts in Europe who in turn pass it on to the American traders where the trading has just begun; the cycle goes on. The currency market is considered as the one with the most liquidity. Below are listed different features and terms that you will come across while trading in India.

€ In order to participate in currency trading, the participant has to be a resident of India. Currently, NRI citizens are not allowed to take part in the futures market. Trading has to be done as per the currency pairs laid down by the Reserve Bank of India.
€ The currency pair USD INR is the most commonly used and the biggest trading pair for currency trading activities in India.
€ The national stock exchange is the most widely used exchange
€ Similar, the most widely used regulatory bodies include the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI).

A spate of terminologies are used while trading, some of the most common ones include:

Exchange Rate: The number of units of the currency of one country that must be given in return for one unit of the currency of another country.

Spot Price: The price at which currency trading takes place in the market. T+2 is the spot price of USD INR pair.

Initial Margin: The amount that is first deposited when the futures contract is entered.

Also termed as forex trading, the currency trading is carried out online as well, which means you can monitor the changes in exchange rates at regular intervals of time. The currency pair is the most important factor in the trading where the former currency is known as the base currency while the latter one is called as the reference currency. In order to deal accurately and generate profit while dealing in online foreign currency trading, it is important that you must know all the basics and different terms that are involved in it. You cannot enter the market immediately and start trading without having a good knowledge about the entire trading process.