Currency markets or forex markets are the largest investment markets in the world with a total turnover of around $2 trillion. Currently, the Indian forex market is the 16th largest in the world with a staggering turnover of $58 billion.
The currency market is highly regulated in India and one can perform currency trading through a broker that has been registered with the Securities Exchange Board of India (SEBI). Zerodha is one such broker. In this article, let us discuss some of the basics of Zerodha currency trading.
Trading in currency can be done through futures and options contracts. Zerodha Kite offers a seamless way for traders to trade in different currency pairs in India. However, before you begin trading, check for the Zerodha strike price range for currency trading to avoid any issue later.
Here are the steps need to follow to trade currency:
Open the Zerodha Kite app and log in using the User Id and Password.
Now select the currency pair future or options contract.
Add it to the watchlist and click on Buy or Sell button.
Now enter the quantity, price, product type, and other advanced trading options available to minimize the loss and to save the cost of trading.
Swipe to left and Confirm your order.
In case you want to take an early position in any currency trade, you can opt for AMO order in Zerodha that allows you to trade between 3:45 PM to 8:59 AM.
Now in futures currency contracts if the trade does not seems to be beneficial then you can rollover your position.
But when it comes to options where it is only obligated for a seller to settle the trade, the buyer already holds the right to exit without settlement, is there any provision to rollover the position.
Currency derivatives span margin calculator is available which can give details of the contracts, expiry dates, prices, normal margin and MIS margin. Intraday trades using MIS (Margin Intraday Square Off) product type give additional leverage which is around 50% of NRML margin.
All intraday positions in currency trading must be squared off by 4:30 pm, failing which an auto square off will occur.
Let us take an example to understand how margins can be calculated.
Suppose I want to trade in USD – INR, I would need to type “USDINR” in the margin calculator and the details of margin requirements with respect to different expiry months will appear on the page.
Cover orders include a compulsory stop loss which makes them a little less risky and therefore, provides higher leverage as compared to an MIS order. Margin requirements are variable on the basis of the stop loss specified.
Bracket Orders (BO) – Intraday trading in currencies can be done using bracket orders where one can place buy/sell limit orders with the specification of a target price and a compulsory stop loss.
Now comes the calculation of the overall brokerage and other fees imposed by the broker to trade in the currency segment.
As discussed above there are taxes and other fees associated with the trading which are a little difficult to evaluate. However, you can make it simpler by using the brokerage calculator.
We provide the calculator tool where the trader just needs to enter the buy and sell price along with the quantity. This helps you in knowing the total brokerage and profit you can make from the trade.
Currency trading is slowly picking up pace in India among retail investors as well. One should trade in currencies only through SEBI registered brokers and only those pairs which are allowed right now.
Cross currency trading is not allowed in India.
Zerodha allows currency trading in 4 pairs and existing demat and trading account holders need not open a separate account for trading in currencies. New customers can easily open a Zerodha demat account and trading account to trade in currencies.
Again, this needs to be understood that before placing an order, Zerodha brokerage calculator and span margin calculator must be checked in order to know about the margin requirements and details of charges going to be incurred on a trade.
One does not need to make an actual trade in order to find the margin requirements and brokerage and other charges. Stay educated, stay invested!
In case you are looking to get started with currency trading or stock market investments in general, let us assist you in taking the next steps ahead.