India Forex Trading Strategies

  • December 14, 2020

Forex traders rely on certain basic strategies to make a profit on international markets. These forex trading strategies are easy to learn but difficult to master. Take a look at some of the major forex trading strategies. 

Scalping

Scalping is a forex trading strategy that involves making small profits with multiple trades. You can set the entry and exit positions with minor changes in the currencies to achieve low margins. Scalping needs precise execution to make the most of your trades. 

These are short-term trades that can last anywhere between 1 to 60 minutes. Being well-informed about currency trends is crucial to successful scalping. 

Day trading

As the name suggests, day trading involves opening and closing a trade on the same day. These trades can take place anywhere between a few minutes to a couple of hours. This way you can avoid running through unprecedented losses due to overnight price volatility. 

If you’re new to forex trading, day trading is a simple and straightforward method to start earning. It can limit your risk while improving your chances of profitability.  

Swing trading

Swing trading is a strategy that involves trading forex currencies over a day or a week. This method gives you plenty of time to deflect daily ups and downs in the value of currency pairs. You can skip through needless stop losses along the way with this medium-term forex trading strategy. 

Position trading

Position trading is a strategy that involves holding your trade positions open for the long term. These trades can take place anywhere between a week to several months or even years. This method lets you take advantage of major shifts in the value of currency pairs without stressing over micro changes in the market. 

You can set the entry and exit positions for lengthier durations with position trading. Keeping a watchful eye over current events and socio-economic policies that affect the world at large is key to making this type of trading work. You can casually sign-in to your account once or twice a week. 

Range trading

Range trading is a strategy that involves predictable price movements of currency pairs. This method relies on historical performance data of currency pairs to identify repeating patterns of lows and highs. 

Based on the financial data, you can set a wider entry and exit position to capitalize on previous price trends. With the calculated risks involved, it is a safer alternative to day trading.

Forex Trading Example in India

Let’s say the USD/INR is trading at 74.6350. If you’re expecting the value of USD to rise in a few hours, you can buy 100,000 units of USD. In this case, you’ll need 7,463,500 INR deposited in your account to complete the transaction. 

In 3 hours, the value of the U.S. dollar against the Indian Rupee rises to 75.0000. You can immediately sell the $100,000 you bought and make a profit of 36,500 INR (7,500,000 – 7,463,500) within a single day.  

Making Money with Forex in India

The biggest hurdle you’ll face when trading Indian forex is the limited number of foreign currencies. Indian residents can only trade forex pairs with the INR in it. But the USD/INR is a popular currency pair with an attractive return rate. 

Historically, the USD has been proven to grow stronger in value over the years. Considering the recent performance, the 52-week low for the USD is 68.2900 while the 52-week high is 76.9163. You can leverage the broad range of price movements to make tremendous profits in the short and long-term. 

Forex Terminology

Millions of people trade forex every day. For successful forex trading, learn these basic terms before you get started.

Pip: the smallest unit of price movement in a currency pair. Forex pairs are usually listed to the 4th decimal point. For instance, if the USD/INR has moved from 74.6535 to 74.6545, it is considered a rise of 10 pips. 

Lot size: the total number of currency units bought or sold. 100,000 units is the standard lot size but you can trade lesser units as well. 

Orders: an order lets you execute the trade.For instance, if you want to buy 100 USD/INR, you execute a buy order. Similarly, if you want to sell 100 USD/INR, you execute a sell order. There are different types of orders to help you minimize losses and maximize profits. 

Calls: a call is sent out by your online broker when your trade positions need additional funding to be maintained. You should constantly check your account for any calls you may have received to avoid further losses. 

Trade Forex in India

Indian forex is an untapped market with great potential. INR currencies pairs such as the USD/INR and EUR/INR can offer a spike of up to 1,000 pips within a few weeks. 

Trading Indian forex can reward your patience with profitable returns in the long run. 

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