[00:00] Many of you are angry with us because we have been asked to talk about currency trading multiple times since the channel started. But we couldn't talk about it because of pending F&O and equity related concepts.
[00:18] Most of the people think currency trading will give good leverage. Simply, if you buy a USD INR future worth 2000 rupees, for every 1 rupee increase
[00:36] If the number is 82.6, if it becomes 83.6 then the profit will be 1000 rupees. For every 1 point we will get 1,000 profit, because here the lot size is 1000.
[00:57] We don't see this much leverage anywhere else, if we keep 2000 rupees, it will be like buying a contract worth 82,000 rupees. We are getting leverage of 40 times.
[01:09] Beginners show interest in currency trading because they can get high profit even with less capital. But we don't mean that you have 2000 or 3000 rupees or 1 crore rupees.
[01:25] If you are trading in a product, you should have a good understanding of it. If you have a good understanding of it, you can respect your capital and choose the path to succeed in trading.
[01:40] Otherwise, no matter how much capital you have, the stock market will be ready to take it from you. In today's video, we will discuss the basics of currency and the important terms related to currency trading.
[01:53] We will discuss the factors that influence the growth and decline of currency. So that you can understand how to buy and sell.
[02:06] Before starting the video, this content can be adjusted in a 10 minute video. But in this video, you will get complete knowledge by combining 3-4 videos. If you find our efforts to give you this knowledge valuable,
[02:21] then like the video and encourage us to make more interesting videos. I will talk about the basics of currency in short.
[02:37] But if I talk about it in short, we have the Burtter system. some people are cultivating something, some people cultivating some other thing,
[02:50] The things that they have or the cultivated crop, giving these to the others and taking something they wanted in return They try to give the surplus of things and fruits that they have giving them to others and taking the things that they want in return.
[03:06] Like if I growing apples, I give you two apples and take one orange form you. We change things according to a system. Like gold and copper, we value them and change the value of those things into gold.
[03:24] Like if I want to sell fruits, I don't need oranges for 10 apples, I use that gold coin and buy oranges. using the same metal as a reserve,
[03:39] let's say there is 1000 kgs of gold in my country. I issued currency papers related to that value and gave it to my people. the value of that note is also in gold form.
[03:56] it is called gold standard. they took control of currency printing in their countries.
[04:08] when to increase and when to decrease, Still, the currency note that you are using now, This is the history of currency.
[04:21] Friends, first if you understand the importing things, you will have a clarity related to stock market. How do you tell that Indian currency will become strong?
[04:36] Think about it once, how do you tell that Indian currency became strong or weak? From here, if a dollar is giving Rs.83 per month,
[04:48] you will say Indian currency became strong by comparing it with dollar Most of the currencies, whether they are becoming weak or strong, We should not say that this currency has grown or decreased individually, like in stocks
[05:03] we should compare with another currency. Second thing, there is a dollar index called DXY. That is the only thing that can tell whether dollar has grown or decreased individually.
[05:17] If DXY is growing, dollar will grow individually. So, remember these two logics related to currency. If rupees is getting strengthened, what comes to our mind instantly is,
[05:34] if it goes to 85, 90, 100, we think it is strengthened. From here, a month's worth of phone you want to buy, From here, a month's worth of phone you want to buy,
[05:51] you want to buy a phone worth 1000 dollars. If after a month, a dollar is equal to 100 rupees, Means, you are keeping 20,000 rupees as an additional amount instead of last month's worth.
[06:10] why are we adding more money? If we see a rupee of 1 dollar equal to 82, 83, 84, 85, 90, if it goes like that.
[06:23] if it is falling like 83, 82, 80, 79, 78, when will the rupee value increase and when will it decrease? We will talk about the factors that influence currency.
[06:39] RBI's are banning currency trading in recent times. Is forex trading legal or illegal? are there futures of currency?
[06:54] There are 4 currencies like USDINR, EuroINR, GBPINR, JPYINR. In NSE and BSE, you can trade in any of them. Like, there are some foreign brokers,
[07:11] We shouldn't trade in international forex markets by putting money in them. We can trade in Indian exchanges currency, futures and options.
[07:26] But, RBI have restricted the global currency platforms to put money in the apps. So, in any platform, which is called as forex platform,
[07:38] In fact, many banks don't allow it. You shouldn't transfer money and get into withdrawal issues. These are the 4 pairs that we see in Indian market.
[07:54] So, these 4 futures and related options are USD, Euro, British Pound and Japanese Yen. So, USD means how much is 1 dollar equal to in rupees.
[08:08] 1 Euro is equal to how much rupees, it will be traded here 1 GBP is equal to how much rupees, it will be traded here 1 JPY is equal to how much rupees, it will be traded here
[08:20] So, the INR pairs listed in India are dollar, euro, GBP and JPY. These 4 are the most traded currency in Indian market.
[08:33] Apart from these, there are cross pairs. and most of the brokers don't show it in their platforms. The most focused one is USD INR.
[08:49] We have physical settlements in commodities. But, we don't have physical settlements in stocks. We can play with individual stocks.
[09:03] We can buy and sell a metal future in commodity. Depending upon the stock related fundamentals and valuations. What is the currency that you see first?
[09:20] You see the currency that you see second negatively. Which currency you are trading you are seeing the first currency positively and the second currency negatively.
[09:34] When will you get the benefit? When will the value of 82.525 increase? Or, the rupee should become weak.
[09:48] If both are strong, Both can be positive. But, if the dollar is more than the rupee,
[10:01] Then you see the dollar positively and rupee negatively, The first currency that you see is called the base currency. Next to it is the quotation currency.
[10:16] the side of the base currency is bullish, Who trades in the currency? there are only a few people who speculate and trade like us.
[10:30] those who import and export and do big businesses. I want an electronic equipment from America. If I am the present, I have 100 crores of money ready.
[10:46] If the dollar strengthens in the upcoming times and the rupee weakens, the equipment that I have to buy with these 100 crores will go to 120 crores and 130 crores. I come directly to Futures and buy USD INR futures worth 100 crores.
[11:00] if I buy with money and it falls, my equipment will be worth 80 crores from 100 crores. since I have to convert rupees into dollars,
[11:15] I don't have any loss. if I don't hedge with futures, How can I buy?
[11:27] If I can buy, I will lose money here. But, if it increases, if I don't come with futures, because the rupee value weakens,
[11:40] So, imports, exports, big institutional businessmen, And even banks, Reserve Bank of India,
[11:53] And Indian currency markets have a timing. And lot size. Each lot, the lot value that you buy,
[12:06] Please observe carefully. Suppose, you are trying to buy the future of Nifty. It will have written the meaning below,
[12:19] But, if you want to buy the future of USD and INR, In Day Trader Telugu, 1 lot is equal to 1000 quantity.
[12:31] and 1 lot is equal to 50. But, look below. Because, this 1000 is not quantity.
[12:46] You have to observe this carefully. they will represent lot 1. If you have more money in your account,
[12:59] So, 1000 You are buying huge quantity. There is mostly liquidity in currency trading.
[13:13] PIP is a meaning point in percentage. It is 82.50, 25, 50.
[13:25] PIP is equal to a tick price. For 5, 5 paise, right? how much difference do we have there?
[13:39] if you want to buy at a limit price, After that, how much should I put? If you want to reduce that,
[13:51] Similarly, here, in currency futures, Like, 82.5050. the last 2 digits,
[14:05] So, in the last 2 digits after the point, The price change here, And that change will also change with 25, 25.
[14:19] Means, 25 increased. Again, 25 decreased. Like this, you notice here,
[14:31] So, 82.50. 50 is paise. So, 1 rupee is equal to 100 paise, right?
[14:46] Similarly, if we cut 1 paise into 100 parts, So, 1 pip or 1 tick is equal to 1 by 4th of 1 paise.
[15:01] Each point will increase and decrease. 1 by 4th paise. I will buy this at the market price.
[15:16] 82 rupees and 50 paise. 82.5075. the change of 1 tick or 1 pip
[15:31] I bought it when the price was 5075 after the point. But, now it is 51005125 after the point. each tick or each pip will be 2.5 rupees.
[15:46] 1 by 4th of a paise. You understood, right? In the beginning, I thought it would be 1800 and something.
[16:01] You can see the loss and gain of the change here. But, if you see here, it changes to 7 or 10 rupees.
[16:13] Unless, there is a big event, it will not change to 5 or 10 percent like equities and commodities. It will not move to such a big volatile.
[16:26] They changed to a very volatile currency during Brexit. there will not be a big fluctuations in the currency. Like, previous close 82.6075.
[16:40] That is the biggest change. that is a big change. So, where will the broker risk and the client risk?
[16:56] And, we should talk about expiries. We have weekly expiries too. Every expiry expires on Friday.
[17:08] If it is a holiday on Friday, it expires the day before. if you type USDINR, you will see CDS at the end.
[17:21] If you type USDINR BCD, you will see that too. But, usually we know where the liquidity is high. And, another thing.
[17:36] And, you will also see options. If I go to 83, I can buy the call option. since the margin is low,
[17:50] Let's say, I want to buy this option. then, it will be less for options. Let's say, it will cost 75 to buy this option.
[18:03] There is no logic to go options related. We can see that the margin we are keeping on futures is better. Because, the same charges will cost 25 rupees related to futures.
[18:17] There is no change in charges. So, logically, there is no requirement to go to options in Indian currency market. liquidity will also be an issue.
[18:30] And, another thing, traders should select only intraday. Because, overnight, global forex or global currency market related changes And, again, gap up here is not changing 30% or 20%.
[18:46] So, even if it changes in money, it will give a big change. People who are keeping 1000 rupees with 40,000. But, 82.5 multiplied by lot size is 1000.
[19:00] So, 82,500 rupees will allow us to trade. Carrying overnight is not correct if you don't understand global factors.
[19:14] I hope you understood the topic of currency. What factors will change the currency? Friends, there are broad factors.
[19:27] Let's talk about the factors that will impact the currency in a big way. We should remember this word. if we are studying about equity markets or macro economy,
[19:43] But, current account deficit plays a key role. Let's say, we are selling goods from India to foreigners.
[19:55] I have sold my goods to Americans. They pay me in dollars. Now, a dollar has come to me in rupees.
[20:09] They bought our currency with their currency. Not like that. Most of the people in India are buying foreign goods with interest.
[20:25] Now, those who want to sell in India understand that there is a demand for foreign goods. we should import those goods. what should we pay in?
[20:39] Or, will they convert the rupees into dollars? Then, we buy dollars with rupees. The dollar will become strong.
[20:52] Due to imports and exports, the strength of the dollar and rupee in India will change. So, we are exporting more than imports.
[21:05] We are converting the dollars into rupees instead of rupee into dollars. We are importing more than exports. If we convert the rupee into dollars instead of dollars,
[21:18] Remember these factors. The imports have increased more than exports. and if we import 125 rupees from another country,
[21:34] How much has the import and export increased? This is our current account deficit. If you are thinking that the current account deficit has increased,
[21:48] What will happen if we do that? the rupee will become weak. So, the current account deficit will also be negative in the Indian stock market.
[22:06] So, the currency value of the country will be dependent on current account deficit, interest rates and decisions taken by the central banks
[22:21] We know the logic of inflation and interest rates. If inflation increases, the interest rates will also increase. the liquidity in the economy will decrease.
[22:35] Let's think simply. The interest rates are increasing to control the inflation. Will the currency of the country become strong or weak due to the increasing interest rates?
[22:49] If the central bank increases the interest rates, the banks in the country will also increase the deposit rates and loan rates. Let's assume that the interest rates of India are increasing.
[23:07] let's assume that the person who has money in the US dollar Let's assume that he has a few lakhs of dollars. if he converts the same money into Indian rupees and deposits it in Indian banks,
[23:22] It seems like he is getting a risk-free return. If the interest rates in India are high compared to the interest rates in America, if he converts the money into Indian rupees and deposits it in Indian banks,
[23:36] So, if the interest rates in a country are increasing, the inflows from other countries will increase. Because, time to time,
[23:52] And, to convert the dollars into rupees, It is literally negligible in practical calculations.
[24:04] So, notice that if the interest rates in America are decreasing, The global equity markets will increase. the money there will not get a big return.
[24:20] The money in the banks or other financial routes will not get a big return. If the interest rates are increasing in the same country, so why to have this headache,
[24:34] So again that money will go to US. So if the US interest rates are increasing, it is negative for entire global equity markets. If interests rates are decreasing in America it is positive for the entire global equity markets.
[24:46] Which ever country interest rates are increasing, it is positive for the currency. Which ever country interest rates are decreasing, it is Negative for the currency We know link between inflation and interest rates, so we are not discussing it.
[25:01] Let's say someone came to India for war. All our resources will be drained. Not just a small amount, but hundreds, even in billions.
[25:16] But the economy is disturbed with the dollar. So, for that an index is formed And some currencies will be linked to the dollar index.
[25:32] These are all topics that we will be discussing in an individual video. These are the factors that influence our currency. We also saw the live trade.
[25:47] Whether we buy or sell, If you think the rupee is weak and the US dollar is strong, you buy. Or if you think the rupee is strong and the US dollar is weak, you sell.
[26:02] One is CDS and the other is BCD. The one you see on top is CDS. BCD is the currency related to BSE.
[26:18] If you are seeing CDS then the currency related to NSE. we usually buy last 2 digits after the point
[26:31] lets the last 2 digits after the point while you see is 25 Then, you get two pips or 0.50 paise profit.
[26:46] I have already talked about the timing. We have these in working days. and what are things that we should keep an eye on while buying and selling, like CDS, BCD
[27:03] How should we trade? How we have any particular strategy? the price action is the same, supports and resistance is same.
[27:15] There won't be much volatility. But it moved from 82.4 to 82.74.
[27:27] It looks like a big move, it really is a big move will change depending on the number of lots.
[27:39] It is 25 rupees per lot. Trading in Forex is illegal.
[27:51] Trading in currency pairs in India is legal. The broker will keep it activated.
[28:03] I hope this content added value to you. There are many videos in this channel.
[28:15] If you want to support our efforts, You can also use the links in our channel.
[28:27] you will be supporting our channel if you go through our channel links. Till then, take care. Jai Hind.