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Currency Basics Forex Market Terms
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Currency Basics Forex Market Terms

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  • 1. Welcome to the World of Currencies
  • 2. Lets understand, how foreign exchange market really works…
  • 3. Spot
    Three ways of trading in Forex
    Spot
    Forward
    Future
    • Foreign exchange spot trading is buying one currency with a different currency for immediate delivery. The standard settlement convention for Foreign Exchange Spot trades is T+2 days, i.e., two business days from the date of trade execution.
    • 4. An exception is the USD/CAD (US – Canadian Dollars) currency pair which settles T+1. Rates for days other than spot are always calculated with reference to spot rate
  • Three ways of trading in Forex
    Spot
    Forward
    Future
    • A foreign exchange forward is a contract between two counter parties to exchange one currency for another on any date after spot
    • 5. Settlement Day –
    TD
    TD+1
    TD+2
    TD+3 or any later day
    For example, if April 5 is the TD. Then April 6 is tom and April 7 is spot. Any day after April 8 is forward. Also note that Saturday and Sunday or market holidays will not be considered
  • 6. Three ways of trading in Forex
    Spot
    Forward
    Future
    • To participate in the currency markets one needs to go through an Authorized Dealer. Most of the trading is done Over The Counter
    • 7. To encourage retail participation and to do away with some of the disadvantages of the forward markets the exchanges have introduces Currency Futures
  • What are currency futures?
    A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that they are standardized exchange traded contracts
  • 8. The difference between currency forwards and exchange traded futures
  • 9. NSE Currency Futures
    Contract Specifications
  • 10.
  • 11.
  • 12.
  • 13. Trading in Currencies
    NOW
    NEAT Plus
  • 14.
  • 15. Price conditions
  • 16. Time conditions
  • 17. Other conditions
  • 18. Thank You