International School of Financial Markets Currency Market Module Reg. office : Plot no. 152 - P (LGF), Sec – 38, Medicity Road, NR Medanta Hospital Phone : 0124-2200689, +91 7015237224, +91-8168573253 +91 8368025252 Web: www.isfm.co.in , Email : [email protected]
Career in Stoc Get Certified by SEB Currency Trad
ck Market BI’s Certification ding Course
Name Email Id Mobile No. Sr. No. Session Name Sub Topics What is Currency Market, Structre of Currenc 1 Introduction to Market, What is Stock Exchange Currency Market Participant of Currency Market, Roles and responsibilites Major Stock Exchange in Currency Market Major source of information in Currency Mark Top 5 Website, Top 5 apps to use History of Currency Market in india What are Major Products in Indian Currency M What is Base Currency and Pair Currency pairs 2 Introduction to How to undestand MTM of Currency Market Currency Derivatives What is Appreciation and Depreciation in Curr Market How to hedge your business with Currency Tr How to trade in direct pair and cross pair of C Market What are major products in Metal Market How to trade in Copper using LME Exhange an data What is spread trade and how to make profit market 3 Base Metal Market Major pair and their lot size and its features How to track demand and supply of Metal in C Market How to find fair value of Commodity Future How to trade in Metal Market using Technical and make strategy
Course Name DD……...MM……...YY……….. Batch No. Duration Time Presented by Remarks cy 1 Hour Sushil Alewa ket Market 1 Hour Sushil Alewa s rency rading Currency nd China in live 1 Hour Sushil Alewa Currency l Chart
4 Practical Session for How to trade live in Currency Market using T Currency Trading Analysis and Forex Market data 5 Practical Session for How get profit from Equity Market by conn Currency Trading Currency Market
Technical 1 Hour Anil Mor necting 1 Hour Sushil Alewa
A brief History Currency Futures started in 1972 at CME & based Futures contract. In India Currency Futures trading started on During 1944 1971,countries adopted a system called blend of gold standard system and floa As part of the system, all currencies wer value was pegged to gold. The US guaranteed to other central banks th time and USD value will be pegged to value Countries also agreed to maintain the exch of the fixed parity with US dollar. With adoption of this system, USD became t
on 28th Jan. 2013 they have launched Rupee 29th August 2008 in Mumbai. Bretton Woods System. This system was a ating rate system. re pegged to USD at a fixed rate and USD hat they can convert their currency into USD at any e of gold. hange rate in the range of plus or minus 1% the dominant currency of the world.
History continue…… Finally Bretton Woods system was suspen ating or managed float method of valuin moved to a market determined exchange a system of pegged currency or a sys In pegged system, the value of currency currencies. The benefit of pegged curren y for foreign investors as they know the y point of time would be fixed. Although in long run it is difficult to maintain the peg and ultimately the central to a managed float or free float. In managed float, countries have controls ion is a common tool to contain sharp volatili
….. nded and countries adopted system of free flo ing the currency. Developed countries gradually e rate and developing countries adopted either stem of managed rate. is pegged to another currency or a basket of ncy is that it creates an environment of stabilit value of their investment in the country at an bank may change the value of peg or move on flow of capital and central bank intervent ity and direction of currency movement.
Foreign Exchange Deriv Derivatives - Definition :- Derivative is a product whose value is derived from t lying asset, index, or reference rate). The underlying a r asset. For example, wheat farmers may wish to sell nge in prices by that date. In the Indian context the Securities Contracts (Regulatio \"derivative\" to include- 1. A security derived from a debt instrument, share, lo unsecured, risk instrument or contract for differences or security. 2. A contract which derives its value from the prices, o underlying securities. Derivatives are securities under the SC(R)A and hence work under the SC(R)A.
vatives the value of one or more basic variables, called bases (under asset can be equity, foreign exchange, commodity or any othe their harvest at a future date to eliminate the risk of a cha on) Act, 1956 [SC(R)A] defines oan whether secured or r any other form of or index of prices, of the trading of derivatives is governed by the regulatory frame
Derivatives Products Derivatives have four major p Forword Contracts Future Contracts Options Contract Swap :- Interest rate swaps Currency swaps
products : -
Major Participants Banks Brokers (Brokerage firms) Business entities (merchants, corporations, etc.) Individuals Governments Central banks International organizations
Exporters : Star Export houses Importers HNI Clients Traders Speculator : Who wants to speculate and earn intraday Profits
Why its needed ? Easy to Understand Modera Volatili Alternate A Class Less Cost of Transaction
ate Less Margin ity Asset s Hedging Tool
Less Margin F&O segment, margin requirement is 20 – 25%. In major Commodities, margin requirement is 5 – 8 %. In Currencies, margin requirement is 1.5% – 2.5 %
Currency futures A futures contract is a stan an exchange, to buy or se an instrument at a certain ified price.
ndardized contract, traded on ell a certain underlying asset or n date in the future, at a spec
Major Currencies Pair US Dollar (USD) EURO (EUR) Japanese Yen (JPY) Pound Sterling (GBP) Australian Dollar (AUD) Canadian Dollar (CAD) Swiss Franc (CHF)
Overview of Internationa Currency Pair : - Base Currency ( BC ) Vs Quotation ( QC ) For the currency pair, the standard practice ode. For example, in USDINR (or USDINR ency; and what is quoted in the market is the price of INR expressed in USD, then you erefore if a dealer quotes a price of USDIN ue of 68 INR. Similarly, GBPUSD = 1.44 44 USD. Please note that in case of USDINR, cy while in case of GBPUSD, USD is quotatio n the interbank market, USD is the unive Euro (EUR), Sterling Pound (GBP), Australi New Zealand Dollar (NZD).
al Market is to write the BC code first followed by the QC c R), USD is the BC and INR is the quoted curr e price of USD expressed in INR. If you want the u must specify the currency pair as INRUSD. Th NR as 68, it means that one unit of USD has a val 4 means that one unit of GBP is valued at 1. , USD is base currency and INR is quotation curren on currency and GBP is base currency. ersal base currency other than quoted against ian Dollar (AUD), Canadian Dollar (CAD) and
Two Way Quotes There are two distinct segment of OTC f lled as “interbank” market and the oth market is the market between banks w or both buying and selling the currency uying and selling is called as market m vendor will quote prices only for sellin Suppose a bank quotes USDINR spo his quote, 78.05 is the bid price and 78 es means that the bank is willing to buy 5 and is willing to sell one for INR USD / INR Buy Rate / Bid 78.05 SBI Bank Two way Quotes
foreign exchange market. One segment is ca er is called as “merchant” market. Interbank where dealers quote prices at the same time f y. The mechanism of quoting price for both b making. For example, your close by vegetable ng and he will not quote prices for buying it. ot price as 78.05/78.06 to a merchant. In t 8.06 is the offer price or ask price. This quot y one unit of USD for a price of INR 78.0 R 78.06. d Price Sell Rate / Ask Price 78.06
Rules for Currency Quota There are certain market norms for he important norms are as follows: The bid price (lower price) is quoted fir The offer price is generally quoted in a quoted upto four decimal places then cimal places and if the currency pair is ce is quoted in terms of two decimal pla
ation quoting the two way quotes. Some of t rst followed by offer price (higher price) abbreviated form. In case the currency pair is offer price is quoted in terms of last two de quoted in two decimal places then offer pri aces.
Appreciation/ Deprecia Changes are also expressed a one currency in terms of the se currency buys more of the qu has strengthened / appreciated kened / depreciated. $ USD 1 Rupees Status 1 70 1 75 Rupees Deprec 1 65 Rupees Apprec
ation as appreciation or depreciation of e other currency. Whenever the ba uotation currency, the base currency d and the quotation currency has wea Remarks s Good for Exporter like IT and ciation Pharma companies s Good for Importer of goods ciation and services companies
Market Timing & Exchan Currency Trading Exchange in India :- 1. Multi Commodity Exchange of India Ltd. (MCX-S 2. National Stock Exchange of India Ltd. (NSE) 3. Bombay Stock Exchange Ltd. (BSE) 4. Metropolitan Stock Exchange of India Ltd. (MSE Market Timing : - Open Time : 09:00 am Close Time : 05:00 pm Trading Day : Monday to Friday Note : Fore direct pair with Rupees market timing i
nge in India SX) EI) is same but for cross pair market closing time is 07:30 pm
Indian Currency Market USD/INR Pair is traded on 5 International Exchanges thus more participation Singapore Exchange (SGX) Timing: - 7.30 am to 3.30 pm Dubai Gold & Commodities Exchange (DGCX) Timing: - 8.30 am to 1.00 am Chicago Mercantile Exchange (CME) Timing: - 5.30 pm to 12.30 am
: Way ahead……!! Intercontinental Exchange (ICE), New York Timing: - 7.00 pm to 10.00 am Bahrain Stock Exchange (BSE) Timing: - FIIs are allowed thus more Volume in coming months Increase in Corporate participation (Importers & Exporters) Traders are considering currency as alternate trading platform
How to Trade in Currenc When we trade in Currency future there 1. Direct pair with Rupees :- USD / INR EUR / INR GBP / INR JPY / INR 2. Cross Pair :- EUR / USD GBP / USD USD / JPY
cy Future e are two kind of pair.
Product Sp Symbol USDINR EURINR Instrument type FUTCUR FUTCUR Unit of trading 1 Unit denotes 1000 $ 1 Unit denotes 1000 € Underlying The exchange rate in INR for US The exchange rate in I Tick size Dollars Euro 0.25 paisa or INR 0.0025 0.25 paisa or INR 0.002 Trading hours 9:00 a.m. to 5:00 p.m. (Monday- Friday) Contract trading cycle 12 month trading cycle Last trading day Two working days prior to the last business day of the expi Settlement Daily settlement: T + 1 Final settlement: T + 2 Mode of settlement Cash settled in INR Daily settlement price(DSP) Calculated on the basis of the last half an hour weighted av Final settlement As per RBI reference rate (comes on daily basis between 1
pecification € GBPINR JPYINR INR for FUTCUR FUTCUR 1 Unit denotes 1000 £ 1 Unit denotes 100000 ¥ 25 The exchange rate in INR for Pound The exchange rate in INR for Japanese Sterling Yen 0.25 paisa or INR 0.0025 0.25 paisa or INR 0.0025 (The Quote will be for 100 JPY) iry month at 12:30 noon verage price 12 - 12.30 pm)
Direct Pair : Contract Spec Underlying Foreign currency as base currency a Market Timing Monday to Friday, 9:00 AM to 5:00 P Contract Size USD 1000 (for USDINR), EUR 100 GBPINR) and JPY 100,000 (for JPYIN Tick Size 0.25 Paise (i.e., Rs 0.0025) Quotation The contract would be quoted in R outstanding position would be in U Trading Cycle GBPINR and JPYINR contracts respect Expiry Day Maximum of 12 calendar months from Two Working days prior to the last bu Final Mode of Settlement Last working day of the month except Settlement Basis Daily mark to market settlement w settlement will be cash settled on T+2
cification and INR as quoting currency PM 00 (for EURINR), GBP 1000 (for NR) Rupee terms. However, USD, EUR, GBP and JPY terms USDINR, EURINR, tively m current calendar month. usiness day of the expiry month at 12:30 pm t Saturday in Indian Rupees. will be on a T +1 basis and final 2 basis
Cross Pair : Contract Underlying In case of EURUSD and GBPUSD, GBP would be the base currency Market Timing JPY USD would be base Contract Size Monday to Friday, 9:00 AM to 7:30 P EUR 1000 (for EURUSD), GBP 100 Tick Size USDJPY) Trading Cycle Expiry Day 0.0001 USD for EURUSD & GBPUSD Maximum of 12 calendar months f Final Mode of Two working days prior to the last bus Settlement 12:30 pm. Settlement Last working day (excluding Saturd Basis Settlement Daily mark to market settlement w settlement will be cash settled on T+2 RBI Reference rate
t Specification the contract would be quoted in USD (i.e., EUR and and USD would be the quoting currency). In case of PM 00 (for GBPUSD) and USD 1000 (for and 0.01 JPY for USDJPY from current calendar month. siness day of the expiry month at days) of the expiry month. will be on a T+1 basis and final 2 basis.
Currency Options Options are the contracts that give t obligation, to buy or sell a specified a specified date. Type Optio Call Bullish USDINR Appreciation (From Rs.73 to Rs.71)
the buyers the right, but not the d underlying at a set price on or before of ons Put Bearish USDINR Depreciation (From Rs. 71 to Rs. 73)
Advantage & Limitation Advantage :- Limited Risk Hedging Less Price and High Volatility Less payment & High Exposure Strategy Formation possible Limitations:- Far Month Liquidity Problem Lack of knowledge amongst market participants
ns of Options Limitations:- Far Month Liquidity Problem Lack of knowledge amongst market participants
Pricing and Behavior of Option prices are determined b The Volatility in the underlying a The Strike price with respect to C The probability of the Option ge The time left for expiry of the co The prevailing interest rates. Thus the option price is a function the underlying and the distance
Search
