What is Forex Trading ?
The term "Forex" stands for "Foreign Exchange." Popularly known as, "Global Market for Currencies." Under market of Foreign Exchange, International Banks trade by financial aspects based on Bond Market; may it be debit or credit.
Need for Forex :
- Foreign exchanges start with the need of barter system in exchange of valuables among ancient Egypt and Greek.
- "Forex Market" was more encouraged in the medieval period between Country of Holland and Kingdom of England as a source of exchange of currencies.
- The year 1880, also known for standardization of gold, was the year of modern Forex trading.
Forex Trade Beginning in Various Countries of the world :
- Only exchange of "Coinage" was seen among ancient Egypt and Greek.
- During 17th-18th century, Amsterdam participated in the Forex Market.
- In 1704, agents of Country of Holland and Kingdom of England trading occurred.
- 1850 was the period in the USA for Forex.
- 1880 the year of "Standardization of Gold" is also recollected as the beginning of Forex.
- Beginning of 20th century was considered to be the era of Forex wherein world nations like London, Paris, New York City and Berlin actively participated.
- In 1954, "Bank of Tokyo" became a Forex Market center in Japan and allowed dealing in many more western currencies.
- There was a closure of Forex Market because of differences pertaining between "Bretton Woods Accord Agreement" and "European Joint Float Policy"; in 1972 and 1973.
- "People’s Bank of China." in China, allowed trading from 1st January ’1981.
- Iran getting influenced by the Forex method exchanged "Oil Barter System" with trading into Forex by 1991.
- Financial Institutions
- Insurance Companies
- Investment Managers
- Hedge Funds formed as private limited partnership
- Individual Investors
Forex Trading Hours Country-wise (GMT; 12 hours format ):-
European Countries :
- London (United Kingdom): 8 am to 5 pm
- Frankfurt (Germany): 7 am to 3 pm
- Paris (France) : 9 am to 5’30 pm
- urich (Switzerland) : 9 am to 5’30pm
American Countries :
- New York City (United States): 1 pm to 10 pm
- Chicago (United States): 8 am to 4 pm
- Toronto (Canada) : 8 am to 5 pm
Asian Countries :
- India: 9 am to 5 pm
- Wellington (New Zealand) : 8 am to 5 pm
- Hong Kong (China) : 9 am to 5 pm
- Shanghai (China) : 9 am to 5 pm
- Singapore : 9 am to 5 pm
- Moscow (Russia) : 9’30 am to 7 pm
- Sydney (Australia) : 10 pm (comes online)
- Tokyo (Japan) : 00 am to 9am
Forex Trading Illegal in India :-
- Here are people who are fraudulent, cheaters who carry unauthorised business and fake run agencies.
- These fraudulent hunts for specific investors who are ready to invest their money and guarantee them heavy investment returns.
- They get easily trapped because of the greed of earning high profits in short run.
- RBI warns Indian residents to not fall into the trap of such unregistered agencies.
- Transactions by such fake agencies are unauthorized and hence to be considered "Illegal."
- No guaranteed high returns are possible without years of proper market research and good time investment.
- Instead will have to suffer a heavy loss of finance, if fallen in prey.
Forex Trading Legal in India :-
To be specific as per the guidelines of Reserve Bank of India (RBI) and certain terms set by SEBI; trading in foreign exchange is "Legal" only through NSE Currency segment, MCX-SX, with the "only" foreign currency paired with Indian rupees.
How to start Forex Trading in India :
- Since Forex Trading is illegal in India; as an investor, you need a citizen of the country, other than India.
- A country that accepts Forex Trading to be legal. For example, the European Union and the United States.
- That person will deposit your money on your request to his or her Forex Brokerage account.
- In the case of withdrawal, on your request, they will transfer the required amount, to their bank account first.
- And at the end, transfer the money into your account in India.
What will be considered Illegal ?
- As per the RBI norms, any person, or firm found trading in Overseas Forex Market by any means of the internet; say trading portals or electronic media(in currencies other than mentioned above) will be considered illegal.
- Hence, a person is penalized under the act of violation of FEMA Act, 1999
- Banks in India providing card facilities and online banking services to their resident Indian customer must clear these norms.
- Any exchange of receipt or payment or remittance of currencies in overseas trading by any internet portals or electronic media will be considered Illegal.
- Penalty to respective resident or residents, according to the RBI guidelines by the representative of RBI for violation of:
- FEMA Act, 1999 regulations
- KYC (Know Your Customer) standards
- Anti-Money Laundering (AML) norms.
Forex Trading System :
A technique of scrutinizing and trading a currency pair, based on indications and clues, for a specific time and at a particular price, with the expectation to earn returns, is technically termed as "Forex System Trading."
There can be two types of basic systems for Forex Trading :
- Hand Operated or Manual System :
The system of Hand operation is a technique wherein, technically a broker or an investor, conclude whether to purchase or sell, using an electronic device like a computer.
- Electronic or Automated System :
An automated system is a technique through which a dealer guides the installed software, whether to buy or sell, based on clues and indications, which remove the hurdles of non-physical, rational and cognitive decisions that often lead to poor judgment.Also, it is important to note that these systems are not completely reliable, but can help traders, dealers, and investors, only as guiding tools.Huge money-making companies would never share the secret of their "Money-making."Instead, they keep the secret of earning high returns confidential and unrevealed.
Forex Trading Signals/Indications :
- Traders modify these signals, buy them online and are many times available for free.
- "Specialised Analysis" or "Graphical presentation" or "Broadcasted event" are the base for Forex Trading Signals.
- These Indications or Signals are the parameters showing the valuation of equity, illustrating to execute a decision in real time, for equity.
- A dealer uses a mass of signals and study together to make the final decision of purchase or sell.
- The Internet is useful for buying "Manual" as well as "Automated" systems.
- Money making firms always keep their signals confidential.
What is "Leverage" ?
- The financial benefit available to the investor because of the fluctuations of prices in the market, is termed as, "Leverage."
- The dealer dealing on behalf of his or her investor lends this money.
- Leverage is an amount that an investor could earn as maximum possible returns.
- Investing "Huge capital" shows you even the "Smallest Price Change of currencies "in "Large Differences of overall Profits or Losses."
What is "Margin Account" ?
To initiate Forex Trading the investor needs to open a "Margin Account" with the dealer.
What should be the "Range" of Leverage ?
- Usually, 50:1 or 100:1 is the range of leverage provided for the trade.
- It can also be 200:1 for positions of $50,000 or lesser.
Forex Trading Hours :
- Forex Trading Market works by 24 hours a day, five days a week (excluding weekends).
- Sunday 10 pm (GMT) Sydney- Friday 10 pm (GMT) New York.
- Overlapping of the trading period in various countries of the world, is best trading period.
Forex Trading Robots :
- Computer software specially designed to indicate, suggest and guide the dealers whether to deal with specific currency pair, in particular, time, at a particular price, is technically termed as "Forex Trading Robot."
- It uses tools like graphs and charts to indicate and guide the traders
- It signals after proper analyses done using these tools.
- Trading robots remove the burden of thinking over a decision manually up to a certain limit.
- It also removes the hurdle of typical Human mindset for trading in one direction, which proves unfavorable for the investors.
- Software developers develop the software useful for the purpose.
- You can buy trading robots online
- But, again it’s important for dealers and investors to clearly understand, that, no firm in the Forex Market disclose their policy of "money making."
What is the meaning of Forex Trading Platform ?
- An Online Trading Source is a software program that helps us to buy or sell financial products like Stocks (Equity or shares) and Debts (Bonds and Mortgage) with the help of financial brokers, money makers, investment banks and stock exchange agencies.
- This platform removes the limitations of trading on the phone, trading by out crying bids of products, and similar trading methods.
- Technically Forex Trading Platform allows investors and trading firms to trade and deal online directly, for purchase or sale of the products.
- It also allows making the decision for trade through specific financial analysis based on future predictions of prices to fall or rise.
Types of Forex Trading Platforms :
1. By "Format" :
2. Downloadable :
- You need to install this type of software for specific device.
- You need to systemaize an executable programwith your Trading Platform.
3. Web-Based :
- You can operate an online software can from anywhere. They work on JAVA.
- The dealer can operate this trading platform, using URL on the internet using personal login.
- It is more convenient to use compared to the downloadable platform as a trader need not carry any electronic device for the access.
- Web-Based software is less time consuming and proved to be more effective as compared to the downloadable trading platform.
By Programming Language :
- ActTrader– ActFx Programming Language
- MetaTrader(MT4 & MT5)– MetaQuotes Programming Language
- Trade Station– Lua Programming Languag
cTrader Trading Platform :
- Spotware Systems Ltd. Developed this platform.
- It develops platforms for Electronic Communication Network (ECN) Environment.
Currenex Trading Platform :
- Out of 2 Currenex Trading Platforms, Currenex Viking Platform is the first one – the ECN platform
- Second is Currenex Classic Platform – operating under the market situation of the market makers.
ActTrader Trading Platform :
- It’s a product of ActForex Ltd.
- ActTrader includes both Web-Based (online) and Downloadable versions.
- Runs on ActFx Programming Language
MetaTrader (MT4 & MT5) Trading Platform :
- MT4 is the most popular trading platform, used all over the world
- MT5 is its successor.
- Runs on MetaQuotes Programming Language.
- Traders all over the world are highly impressed by the ease in the task by the use of the MT4 platform and are forced to incorporate it in their software of product packages.
Trade Station Trading Platform :
- TradeStation Technologies Inc develops this platform.
- It runs on Lua Programming Language.
- Forex Capital Markets Ltd. and Interbank Fx use it as a part of their product package.
Which is the "Best" Forex Trading Platform ?
- The best Forex Trading Platform is an "HTML5 Trading Platform "that comes with a source code and can be white labeled.
- It is composed of StockChartX HTML5 Web & Mobile Charting Library, SuperwebSocket Data Server, and Trade script End User Scripting Library.
- It does auto-trading and gives alerts and notification with specialised sound effects.
Steps to connect :-
- Link your market data using SuperWebSocket Data server
- Incorporate your brokerage API
- Link your database
- Install website to your server
- It also provides services of Modification and Incorporation.
- The Web and mobile accessibility are possible, through any device, on this platform.
Forex Brokers in India :
Currently there no registered broker with Indian residency, in India. But, there brokers having international offices in India.
|Since (Year)||Name of Brokers||Type of Broker||Swap-Free Account|
|1975||Philip Capital UK||Independent||No|
|1992||Saxo Bank||Bank, independent Dealer||No|
|2012||Finpro Trading||Independent Broker, Finvasia Group||Yes|
|2014||Formax Prime Capital||Independent||Yes|
Top 10 Best Forex Brokers with minimum spreads in Hong Kong :
|Number||Broker||Minimum Deposit||EUR/USD Spread|
|2||FXM Financial Group||$100||0 pips|
|3||CASH Financial Services Group Limited||$130||1.09 pips|
|4||Emperor Financial||$10000||5 pips|
|6||GLOBAL CAPITAL MARKETS(GCM) ASIA||$100||2.5 Pips|
|8||SAXO BANK||$10000||2.0 pips|
|9||KVB Kunlun||$5000||2.1 pips|
|10||Wingfung Financial||$0||0 pips|
Can a tourist open Forex Account in Indonesia, if yes, how ?
According to the Chairman of Board of Commissioners of the Financial Services Authority (FSA) Muliaman D Hadad in Denpasar, following are the requirements to open a Forex Account in Indonesia:
Provision for the first type of account :
- A tourist needs to have his or her first account with minimum balance of $2000 to maximum $50000.
- You Identity verification requires your passport
- Accounts with amount below $10000 are liable for higher charges.
Provision for the second type of account :
- For no limit account, minimum balance requirement is $50000.
- Required documents include passport, the bank reference from the foreign national origin, credit card, the identity of spouse or domicile certificate.
Provision for the third type of account :
- For an account with large amounts.
- Balance should be more than $ one million with a lower deposit interest tax registered progressively.
- Documents required are same as in the second type of account.
Who provides the Forex platform with "Binary Options" in Netherlands ?
- In Netherland, "binary option" is a new source for investment in Forex Market.
- Hence, regulations are not well developed at this stage and are still in the process
- Even the well-known Brokers thereby, are not well administered currently.
- Though regulatory norms are unfulfilled, there are many brokers who have already applied for obtaining regulations.
- Their approval is under the process yet.
- There are many brokers who come under the category of, "Regulated" (partially), for binary trading.
- "Netherlands Authority regulates the Dutch Financial Market for the Financial Markets (AFM)."
Who are the Dutch Binary Brokers in Netherlands Forex Market, at the moment ?
- NRG Binary
- EZ Trader
- Optieclub BV
- Planet Option
- The Dutch Gambling Commission conducts companies applying to be a Dutch Binary options broker.
- MiFID Licence allows these brokers to run their business in Holland.
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