A forex account is one that holds deposits in one or more currencies for trading. These trades are based on the movement of the foreign exchange market. With this type of account, you can now unlock vast and potentially significant returns from global markets. These and other factors draw investors to forex trading.

Before we discuss the various advantages of a FOREX trading account, let’s understand FOREX trading in detail.

FOREX, the word is a portmanteau, a blend of the words foreign currency and exchange, and self-explanatory. In FOREX, you trade in the currency market, which is the largest market in the world. The daily estimated trading volume is USD 6 trillion, spread over different hotspots around the world and remains active for 24 hours.

FOREX trading is unlike the stock or commodity market. In FOREX, traders trade currency pairs in the direction of the market. Unlike buying stocks, when you trade in currencies, you are simultaneously buying one currency and selling the other. And, you don’t need a DEMAT account for currency trading, as there is no delivery of currency involved. Most trades in the currency market are cash-settled. For online FOREX trading, you only need a currency trading account.

If you are wondering, forex trading can add diversity to your portfolio and let your investment exercise better. The market remains open for 24*7 involves a variety of players from government, banks, institutional investors, travelers, corporations, and amateur traders.

However, the forex market is decentralized. The market operates in different locations like London, Singapore, Tokyo, or New York. To participate in the market abroad, you would need a broker with an international reach.

In India, you can trade in forex derivatives in the BSE and NSE exchanges. However, the market is highly regulated, and trading in non-INR currencies is prohibited under FEMA rules. Before you start trading, go through the rules and guidelines released by the RBI regarding FOREX trading in India, so you don’t end up at the wrong side of the law.

Currencies are always traded in pairs. You can trade in currency derivatives in the Indian bourses. Futures in four currency pairs and F&O in three cross-currency pairs (EUR-USD, GBP-USD, and USD-JPY) are available for trading in the Indian exchanges.

To trade in foreign currencies, you will have to start by opening a currency trading account. Here are the steps involved in that,

• Open a trading account with a reputed broker with a proven record in the market
• Complete the KYC process to make the account functional
• The broker will ask you to deposit the required margin to start trading
• Request requisite access credentials from your broker

Currency trading market is highly dynamic, and the introduction of online forex trading has made it even more agile. FOREX traders are now equipped with highly sophisticated software to trade within seconds of a trading opportunity. It can be a little difficult for a new trader to get the hang of it at the beginning. So, if you are planning to trade in the currency market, here are a few tips that can be the ice breaker.

• Understand the trading style. The FOREX market behaves differently from the others, and hence, you will have to develop a sense of trading in the currency market
• Don’t try to trade in all available currency pairs. Follow one or two currencies like the US Dollar or British Pound to develop a trading strategy
• Successful currency trading is all about trading with sense, effective risk management while having a clear sight of your goal
• Know your limits – plan entry and exit carefully. No trade is a sure shot, so you will have to judge your risk appetite well before trading. A clear idea of the market will help you set your expectations right and losses small

Angel Broking allows you to open a currency account online. When you buy and sell foreign currencies, you tend to benefit from exchange rate fluctuations. These trades generally get executed in pairs, e.g. EUR/USD, AUD/USD, USD/CHF, USD/CAD, NZD/USD. Here’s an easy guide on how to open a forex trading account:

Brokerage houses often provide the comfort of having the documentation completed at your home. A representative carries the Account Opening, and the Know Your Client (KYC) forms with him or her

Along with submitting the completed account opening form, you will also need to provide additional documents. These documents serve as identity, address and financial proofs. This is an extensive list of documents you will need:

STEP – 2

Photo ID proof: PAN card / Voter’s ID / Passport / Driving license / Aadhaar card

STEP – 3

Address proof: Telephone bill / Electricity bill / Bank statement / Ration card/ Passport / Voter’s ID / Registered lease or sale agreement / Driving license

STEP – 4

Financial Proof: Current ITR acknowledgement, Current annual accounts, Form16 (in case you earn salary income), Current Net worth certificate, Current 1-month salary slip

STEP – 5

Verification: Verification takes place via call or visit (by the brokerage house representative)

Application acknowledgement: After your verification is successful, you’ll get your forex trading account login details. You can then begin trading after successfully setting it up