USDINR trading for living? Possible??

natjay

Well-Known Member
#2
trading forex derivatives such as USDINR for living, is it really advisible or doable in india.
Wait for the new contracts in EUR/USD, GBP/USD and USD/JPY to be launched before seeking an answer to this question. It will make currency derivatives trading in India quite interesting and provide alternatives to equity trading.

Besides, profitability is a matter of method and risk appetite than your choice of trading instrument. With more choices, you get better exposure. I personally see a lot of potential in trading GBP/USD, EUR/USD and USD/INR, in that order.
 
#4
Wait for the new contracts in EUR/USD, GBP/USD and USD/JPY to be launched before seeking an answer to this question. It will make currency derivatives trading in India quite interesting and provide alternatives to equity trading.

Besides, profitability is a matter of method and risk appetite than your choice of trading instrument. With more choices, you get better exposure. I personally see a lot of potential in trading GBP/USD, EUR/USD and USD/INR, in that order.
any updates on when the new cross currency pairs are going to be released finally by exchanges..?
 

natjay

Well-Known Member
#5
any updates on when the new cross currency pairs are going to be released finally by exchanges..?
No new updates so far other than RBI's own press releasing from December 2015. My estimate is it will take 3-6 months (new financial year) to have these new contracts available for trading (see: http://www.traderji.com/forex/10068...nge-traded-option-contract-2.html#post1129034)

That said, I hope the lot sizes and margin requirements for these contracts are reasonable enough for retail participation.
 
#7
trading forex derivatives such as USDINR for living, is it really advisible or doable in india.
Yes trading forex derivatives such as USDINR and EURINR for a living is doable in India. I have been trading these pairs successfully for the two years. Short EURINR futures trade was highly profitable last year. Likewise long USDINR trade has been profitable in the last six months.

Pros vis-a-vis index derivatives:
A. Fine position sizing with lot size 1000$ and 1000€.
B. Low margin requirement.
C. Less volatile and more trending.
D. USDINR futures are extremely liquid. A position of 1 million $ can be created or squared with minimal slippage (under 2 ticks).
E. There is no STT which is a big saving.
F. Since all currency futures trade at a premium to the spot, shorting them in an ongoing downtrend gives additional income.

Cons vis-a-vis index derivatives:
A. Our markets are closed during news from ECB or the US Fed. The moves post news can kill your trades and leave a big hole in your p&l. Handle it much like you would handle FOMC decision on rates.
B. Poor liquidity in non$ contracts like €, £ and Yen.
C. Options are only available for USDINR as of now.
D. Cross pairs like EURUSD can be constructed by using two legged trades in € and $. But they cost more due to poor liquidity in EURINR.
E. RBI intervenes heavily at times and one must be careful of such moves. These moves can easily shave off 15-20 paise in a few minutes only to resume the uptrend later. In rare cases big traders can get informal requests/threats to cut long positions in USDINR (e.g. taper tantrum time in late 2013).

Regards
Curious_Trader
 

natjay

Well-Known Member
#8
Our markets are closed during news from ECB or the US Fed. The moves post news can kill your trades and leave a big hole in your p&l.
This is exactly why Indian currency markets should be open right up to midnight (just as MCX is) so that international price volatility is properly factored in. If SEBI/NSE can achieve that then it will be a definite game changer. Besides, the main reason why RBI is even allowing these new EUR, GBP & YEN contracts after all these many years, is to meet the hedging requirements of Indian firms operating globally (IT, auto, pharma).
 

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