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.
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.
Bracket orders also 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.
All the intraday bracket and cover orders should be squared off before 4:30 pm each day.
Zerodha Currency Trading Account Opening
Currency trading feature is mostly enabled on the existing Zerodha users’ accounts.
This means that if one already has a demat account and trading account with Zerodha and currency trading is enabled with it, one can start forex trading with the broker.
If one does not have an account with Zerodha, on needs to open the combination of demat and trading account first. This would come with the facility of currency trading as well.
The account can be opened online as well as offline the details of which have been covered in another article.
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.