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INR (Indian Rupee) common trading strategies in Forex

Ameyaw Debrah

Nov. 20, 2020

If you clicked on this article, you are probably an experienced trader or have gained a fair amount of knowledge, so you are interested in the Indian market. If you want to focus on this market, you should be aware of current currency pair trends and how Forex reacts to them.
Of course, there are many currency pairs you can trade, but if export-import is your area of interest, then one of the ways to gain profit from trade can be INR trading. Let’s see what that’s all about.
Forex and currencies
Forex (foreign exchange market) operates worldwide thanks to the internet, allowing you to trade with every currency pair that exists. Being decentralized, it’s spread over many platforms and enables you to trade with currency pairs such as CHF/USD, JPY/USD, etc. Trading with Indian currency is considered trading with exotic pairs, meaning every major currency (or minor) involved with any money such as INR is exotic, but in general more popular than other exotic currency pairs in Forex.
How are the USA and India connected?
We’ve mentioned import-export trade, so considering how much these two markets communicate, this currency pair isn’t so unexpected. A big plus is there are always significant fluctuations, meaning you can take advantage at any moment you are online, observing the market since it’s operating 24/7.
What is currency pair trading, and what influences it?
Forex is always traded in pairs, where the first currency is base, while the other presents quote currency (the one that decides whether the base will go up or down). For example, mentioned the USA and India, the USD/INR pair will be the one you want to go up on the market. Naturally, being a literal market-based trade, every political or economic event can significantly affect the currency pair. This is when you get to see how much politics can affect money we earn, how countries function and their mutual relationships. That’s why it’s crucial following any news regarding the two countries your pair is made of, so you can know what to expect possibly.
USD/INR trading options
The OTC market played a significant role in Indian business since it was the only way they could hedge the currency exposure. Banks were the only option to get a cover in the OTC market. Of course, the OTC was a lot different compared to Forex, where they weren’t so open to hedging. It was an old-fashioned way of doing business where you would make connections between financial institutions via telephone. As the market and digital age evolved, forex trading became accessible for all sorts of investors. Bear in mind that earlier you didn’t have a broker or any trading account, making it much harder to predict any risk. Nowadays, the internet is everything, and you can do whatever you want while sitting at home.
These days, you can put options on the pair where the difference exchange occurs in INR. You are looking at the quote currency, after all, since it decides the value of the base currency (USD). This is also called “European trading style” It’s about predicting for a certain amount of time (say, for a month), and after it goes by, you see if you gained or lost the value of the currency pair.
There are also “futures contracts” that we’ll briefly cover. In this case, your currency pair will let you buy or sell the base currency at a predetermined price for delivery on a future date (hence “future” contract). In the end, everything is settled in cash in Indian Rupees.
USD/INR trading strategies
There are several strategies you can try out and see if they work for you (of course, try it without using a significant amount of money). Price action strategy is generally the most popular among traders, and it heavily depends on the bull/bear type of price on the market.
You can also try out-trend trading. This is very much based on current events, analysis of what’s happening at the moment, and it means that you depend on the price movement before entering.
Counter-trend trading is precisely what it says. You go to the market when the trend is changing at that very moment.
Position trading is a bit more demanding since it asks for constant chart observation and analysis so you can accumulate as much knowledge as you can.
Carry trade may sound the simplest since it’s based on buying a currency with high interest and selling it when it’s at its lowest.
In Conclusion
With all this information, we can imagine you have a bit of an information overload. That’s why whatever you want to trade. You should take your time, and figure out slowly, with the help of your broker, what’s the best next step and do it for you. What’s important is that you were willing to learn more, so that’s how you ended up here. Continually learning is the quality of a profitable trader, so we wish you luck in your upcoming trades.
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