Ever Wondered How Currencies Like USD/INR Are Traded 24/7 Around the World?

If you’ve ever traveled abroad or sent money overseas, you’ve already interacted with the forex market; you just didn’t know it yet. The foreign exchange market, or forex, is the world’s largest and most liquid financial market, with over $7 trillion traded daily.

But what exactly is the forex market, and how does currency trading work? Can beginners in India participate and profit from it?

This guide will explain forex basics in simple terms, so you can confidently understand and potentially enter this fast-moving global market.

What Is the Forex Market in Simple Terms?

The foreign exchange (forex) market is a global, decentralized platform where currencies are bought and sold. It’s where major pairs like USD/INR, EUR/USD, or GBP/JPY are exchanged based on real-time exchange rates.

Key points:

• Open 24 hours, 5 days a week.
• Traded over the counter (OTC), not via central exchanges
• Dominated by big players: banks, governments, institutions, but individuals can join too

You trade one currency pair against another. For example:

• If you believe the US Dollar will strengthen against the Indian Rupee, you might buy USD/INR.
• If the exchange rate moves in your favor, you profit.

How Does the Forex Market Work for Beginners?

Let’s make it easier:

1. You pick a currency pair (e.g., EUR/USD)
2. Decide direction: Buy if you think the first currency (EUR) will rise; sell if you think it’ll fall.
3. Choose your lot size: Forex is traded in micro, mini, or standard lots.
4. Set leverage: This lets you control a larger position with less capital (but also increases risk).
5. Use a forex platform or broker to place your trade.

Your profit (or loss) is measured in pips, the smallest price change in a currency pair.

Is Forex Trading Legal in India?

Yes and no. Retail forex trading in India is legal only on recognized currency pairs via authorized exchanges like NSE, BSE, and MCX-SX. These pairs are:

• USD/INR
• EUR/INR
• GBP/INR
• JPY/INR

However, trading international pairs (like EUR/USD) via foreign brokers is NOT permitted by SEBI and RBI regulations. So, if you’re an Indian beginner, stick to SEBI-registered forex brokers and legal platforms.

Key Terms in Forex Basics

Here are a few forex terms every beginner must know:

• Currency Pair: Two currencies quoted together (e.g., USD/INR)
• Base & Quote Currency: In USD/INR, USD is the base, INR is the quote
• Pip: The smallest movement in a currency quote
• Leverage: Borrowed capital to increase exposure (e.g., 50:1)
• Spread: Difference between the buying and selling price
• Lot: Standard trading volume in forex (1 lot = 100,000 units)

How Do You Read Forex Currency Pairs?

A forex quote shows how much of the quote currency is needed to buy one unit of the base currency.

Example:

• USD/INR = 83.10
  • Means 1 US Dollar = ₹83.10 Indian Rupees
  • If you think INR will get stronger, you sell this pair

Charts, economic news, and technical indicators help predict these movements.

Can Beginners Make Money with Forex?

Yes, but it requires:

• Education: Start with forex basics
• Strategy: Technical + fundamental analysis
• Risk management: Never risk more than you can afford to lose
• Practice: Use demo accounts before trading real money

Pro Tip: Don’t chase overnight success. Consistency, patience, and discipline are key.

Forex Market Hours (IST)

The forex market is open 24 hours across different global sessions:

• Tokyo Session: 5:30 AM – 2:30 PM
• London Session: 1:30 PM – 10:30 PM
• New York Session: 6:30 PM – 3:30 AM

The best time to trade? When two sessions overlap (like London + New York), as volatility is higher.

❓FAQs About the Forex Market

1. What is currency trading, and how does it work?

Currency trading involves buying one currency while selling another. Profits come from changes in the exchange rate.

2. Is forex trading legal in India?

Yes, but only for INR-based pairs through SEBI-regulated exchanges. International forex trading with unregistered brokers is illegal.

3. Can I trade forex with ₹1,000?

Yes. Some brokers offer micro accounts and leverage, letting you start small. However, always manage risk.

4. What are the major currency pairs?

• EUR/USD
• USD/JPY
• GBP/USD
• USD/CHF

These are highly liquid and most traded globally.

Start Smart with Forex Basics

The forex market offers vast opportunities but also high risks. Whether you’re a student, a working professional, or a full-time trader, learning the basics of currency trading is your first step.

Understand the market structure, choose legal platforms, manage your risk, and always trade with a plan. With discipline and the right knowledge, even beginners can navigate the forex market like pros.