Forex Trading is made of two words i.e. It is the short form for Foreign Exchange, while as Trading as
we know is exchange of various instruments in the financial market.Forex Trading is a big business in foreign countries but, it’s catching up very fast in India too with more people turning traders and making trading their full time work and earning livelihood form it.

Is Forex Trading different from Stock Market Trading?

 It deals with foreign currency and Stock Trading deals with shares.
 In Forex trading the exchange rate matters, while as in market trading the rate of shares matter.
 Forex Trading deals in pairs of currency, while as stock market trading can have even a single
share.
 Forex Trading is more volatile as it trader uses higher leverage while as Stock Market Trading uses
has lesser leverage.
 In Forex Trading you have to open a Margin account with a Forex Broker while in Market
trading you need to open a Trading/Demat account. The same broker may provide you both the
accounts to facilitate the seamless trades.

How does Forex Trading work?

 You have to open a Margin account with a Forex Broker.
 You then buy the desired currency which can be either INR/USD, INR/GBP, INR/EURO or
INR/YEN as these are the only 4 currencies you can buy and sell.
 You need to track the supply and demand of the currency in terms of the exchange rate.
 On the basis of the prevailing trends you can buy (Long) or sell (Short) a given pair for booking the
profits.
 In a long position, if you sell when the exchange rate goes up you make a profit.

As the Forex Trading uses the high Leveraging Feature, trading in Forex can be more risky and volatile.

How Leverage is used in Forex Trading?

 You have to learn to keep your losses as small as possible by applying your Risk Management
Strategy.
 Use the Stop Loss and Trailing Stop Loss mechanisms well in place to ensure that losses are
capped and the profits are protected.
 Keep a track of the exchange rate for optimal profits.
 Adjust the usage of leverage in accordance with your comfort level to avoid over trading.

To understand more of Forex Trading you can contact us and we would be glad to assist you. For more
information visit www.prajinvestments.com or write to us at info@prajinvestments.com.