Module 8 Currency, Commodity, and Government Securities

Chapter 1

Currency Basics

165

1.1 – Module Orientation

At the onset, let me give you a quick orientation, so you can set your expectations for this module. The focus of this module will be on three main topics –

  1. Currencies and currency trading
  2. Understanding Commodities
  3. Interest Rate Futures

I agree that each of these topics is vast, and commands an entire module on its own. However these assets are not as liquid as equities. We are still at a very nascent stage when it comes to trading these alternate assets in India. Given this, the idea here would be introduce these assets, familiarize you with what drives these assets, and what you need to watch out for before placing your trades. So, in a sense, you could consider this module as a ‘thought starter’ of sorts for trading these alternative assets. Needless to say, we will try and discuss these topics to a reasonable depth, ensuring you have more than just the bare basics on these topics.

We’ll begin the module by discussing Currencies. We’ll discuss some of the popular currency pairs traded in India such as USD-INR, GBP-INR, and INR-JPY. We also discuss other (non INR) currency pairs such as EUR-USD, GBP-USD, and USD-JPY. The discussion on currencies would be spread across a few chapters. The objective here would be to introduce these currency pairs, and familiarize with not just the contract specification but also with a few fundamental factors that affect these currencies.

Once this is done, we’ll move on to the next part of the module. This’d deal with Commodities. We’ll follow a similar template here – i.e. introduce the commodities (both agri and non-agri) and get familiarize you with not just the contract specifications but also a few fundamental factors which would influence the movement of these commodities. Some of the commodities we’ll be discussing would be – Gold, Silver, Zinc, Aluminum, Crude oil, Natural Gas, Turmeric, Cardamom, Pepper, Cotton, etc. Of course, the formula to calculate the price of commodities such as Gold, based on the price of Gold in International markets will also be discussed.

Lastly, this module will discuss ‘Interest Rate Futures (IFR)’, which I think is a very exciting space. The discussion would deal with topics related to RBI’s borrowing pattern, issuance of sovereign bonds, listing on NSE, and eventually trading them. Based on how we progress, we can even touch topics related to bond trading and bond trading strategies.

As you see, we have some really interesting stuff lined up. I believe this’ll be a great learning experience for you, and me!

Please note, the prerequisites for this course –

  1. Futures Trading
  2. Options Theory
  3. Technical Analysis

The above mentioned topics are absolutely essential before learning about currencies. I’d suggest you brush up these topics before proceeding.

Let’s now begin this module by discussing few basics about currencies.

1.2 – Currency (in)equality

Before we get started on currencies, let me share with you an interesting conversation I had with my 6 year old daughter. Perhaps this could set a good starting point for our discussion on currencies. 🙂

I had recently been to Austria with my family on vacation. As you can imagine, the country is extremely beautiful. It was my daughter’s first visit to Europe and she was in complete awe. Needless to say, she was attracted to all the small little stores selling pretty little things. On one of the days while we were there, she forcibly took me to this toy store she spotted off the street, and I knew I was in for trouble. After spending about 5-10 minutes scanning through the shop, she finally picked up a colorful wooden caterpillar, and she wanted me to buy her that. It looked really nice, and I was willing to buy her that, until I saw the price! The wooden caterpillar had a 25 Euro price tag. I thought I’d negotiate with her and buy her something else.

I tried telling her that it was 25 Euros, and 25 Euros was quite steep especially for a tiny wooden caterpillar! She obviously didn’t understand my point, and refused to budge from her stance. In fact she said ‘it’s just 25 Euros’, and I realised that she equated 25 Euros to 25 Rupees, completely oblivious to the fact that she needs to multiply each Euro with 78 to get the exact Rupee equivalent.

However this got me thinking – why isn’t one Euro or for that matter one Dollar equal to one Rupee? More generally why isn’t one unit of currency belonging to country A equivalent to another unit of currency belonging to country B? I understand this may sound very basic and some of you may already know the answer, but I think it is very important to discuss this and understand why the inequality between currencies exists. After all, it is this inequality which allows us to trade the currency pairs.

To understand this, we need to brush up a bit on the history of currencies and how currency trading evolved. Don’t worry, I won’t get into history lessons here; will restrict this to a quick recap 🙂 .  For the sake of simplicity, let me break this down into different stages for you based on my own understanding of the evolution of currency.

M8C1-Cartoon1

Stage 1 – The Barter era

Before the advent of currencies, transactions occurred through something called the ‘barter system’. Barter system is a ‘method of exchange’ which has existed for many centuries. In a typical barter, people exchange goods for other goods (or services). A classic example would be – say a farmer has harvested cotton, he could exchange (or barter) cotton with another farmer giving him wheat. Similarly a farmer who has oranges could exchange the oranges he has harvested with someone who agrees to wash his cows and sheep.

The problem with the barter system was the scale and divisibility of the system. For example assume a farmer had 5 bales of cotton and he wants to barter cotton with someone selling cattle, assuming 2 bales for 1 cow, after the barter he’d be left with 2 cows and a bale of cotton. He would certainly not get half a cow for 1 bale of cotton. This caused a divisibility issue within the system.

The scalability was also an issue with the barter system – it required our farmer to travel from one part of the country (with all his produce) to another part of the country to barter for goods of his choice.

Both these issues were eventually overcome with an improved system – Goods for metal.

M8C1-Cartoon2

Stage 2 – Goods for Metal era

The problems that plagued the barter system eventually paved way to the next transaction methodology. People tried to invent a common denominator for the ‘exchange’. The common denominator ranged from food grains to metals. But eventually metals thrived for obvious reasons. Metal was divisible, easily movable, and metal had no issue with shelf life. Further, of all the metals, Gold and Silver were the most popular; therefore eventually these metals became the standard for transactions. The direct exchange between gold/silver and goods lasted for many centuries; however things started to change when people deposited gold and silver coins in safe havens and issued a ‘paper’ against the value of gold. This paper derived its value based on the gold/silver coins deposited in safe haven.

With time, safe havens evolved to banks and the paper transformed to different currencies. Perhaps this was the start of the book entry of the currency system.

M8C1-Cartoon3

Stage 3 – The Gold Standard era

Over time, as domestic trade flourished, trading across borders also flourished. Economic sense prevailed and merchants realized producing everything locally did not make sense. Merchants started exploring cross border trade – simple import and export of goods thrived. This also meant merchants transacting across border also required to pay for it in a currency that was acceptable across borders. Banking systems also evolved, and somewhere around the late 19th Century exchanging goods for Gold (not silver) became the norm. Valuing the local currency against the value of gold was called the ‘Gold Standard’.

As things progressed, geo political situation changed (world wars, civil wars, cold wars etc) and so did the economic situation across the world. When it came to cross border transactions, there was an urgent need for merchants to trust one currency and value their own currency against that currency. This is when ‘Bretton Woods System’ came to the picture. You can read more on the Bretton Woods System.

However, here is a simplified version of the Bretton Woods System (BWS). The BWS was a way of defining the monetary relationship between countries, where the currencies were pegged to USD at a fixed rate while the value of the USD itself was marked against the value of Gold. Countries accepted this system with a room for 1% variation either side (against the pegged value). Needless to say, with BWS in place the USD became the currency the world transacted in, as USD was backed by Gold!

Developed countries slowly withdrew from the BWS system and eventually BWS became history. Countries adopted a more market driven approach, where the market decided the value of one currency against the other. The market drives the value of currencies based on the political and economic landscape of a country versus the other.

This brings us to where we are now.

1.3 – International Currency market (Forex)

Internationally, the notional currency trading volume is massive and needs a moment to digest the figure. As per the April 2013 survey conducted by ‘Bank of International Settlement’ (BIS) the size of International Markets stands at $5.4 Trillion! Here is the link for the detailed report. My guess is we could be close to $5.8 – 6 Trillion as of April 2016. If you can imagine, this is roughly 20% higher than the entire Indian annual GDP that gets traded on a daily basis!

Probably what really contributes to such massive trading is the fact that currency markets chases the Sun. Currencies are traded across all the major markets, and information flows seamlessly.

To understand what I mean, keep the Indian markets as reference and think about it – before Indian markets are open, the Australian, Japanese, Hong Kong, and Singapore markets are open. In fact we get some overlap with these markets. While the Southeast market closes, Indian markets would have just warmed up with Middle Eastern markets opening up. This leads to the European markets opening up – London, Frankfurt, and Paris being the financial nerve center of the Europe. In fact Indian markets are situated in a sweet spot as our time zone overlaps with major Southeast Asian markets and the European markets. Finally the US markets open, followed by the Japanese markets and the cycle continues 24 hours a day, 6 days a week!

Having said that, the most active time for currencies is when the US, UK, Japanese, and Australian markets are open. This is when the order flow gets brimful.

This leads us to an interesting question – who are these people trading currencies and why are the notional values so crazy? More importantly how are currencies traded?

Unlike Equity markets, the participation in Forex is not just restricted to investors and traders. The participants in the Foreign Exchange (Forex) markets are many – Central Banks, Corporate, Banks, Travelers, and of course traders. Each of these participants have their own agenda while participating in the Forex markets. For example the corporate maybe buying/selling USD to hedge their order book, and a traveler maybe buying USD for his travel expense. While the trader maybe just speculating on the movement of the currency.  Obviously since participation comes in from many quarters, the volumes are driven up. More so, Forex trading is highly leveraged, hence the notional value appears large.

There is no centralized International exchange where the Forex transactions take place. Transactions occur at different financial institutions (like NSE in India) and information flows from one platform to another making it borderless.

1.4 – Currency Pairs and quotes

The standard practice while trading currencies is to trade the currency as a ‘pair’. The value of the pair keeps fluctuating as the trades flow through. An example of the pair could be USD INR or GBP INR. The currency pair has a standard format, as shown below –

Base Currency / Quotation Currency = value

There are three parts here, lets figure out each one of them –

Base Currency – Base Currency is always fixed to 1 unit of a currency (like 1 US Dollar, 1 Indian Rupee, 1 Euro etc)

Quotation Currency – Refers to another currency which equates to the base currency (obviously it can be any currency apart from the base currency)

Value – Indicates the value of the Quotation Currency against the Base Currency.

Confusing? Let take an example to make it clearer. Assume USD/INR = 67.

The Base Currency here is USD, and as I mentioned earlier the Base Currency is always fixed to 1 unit, hence this is fixed to 1 US Dollar.

Quotation Currency is in Indian Rupees (INR)

Value is 67, which means for 1 unit of Base Currency i.e. 1 USD the equivalent quotation currency is 67. In simpler terms $1 = Rs.67.

The most active currency pairs that get traded across the world and its current value as on 3rd June 3, 2016 are as follows –

SL No Base Currency Quotation Currency Pair Pair Value
1 Euro US Dollar EUR/USD 1.11
2 US Dollar Japanese Yen USD/JPY 108.94
3 Great Britain Pound US Dollar GBP/USD 1.44
4 Australian Dollar US Dollar AUD/USD 0.72
5 UD Dollar Canadian Dollar USD/CAD 1.31
6 US Dollar Swiss Franc USD/CHF 0.99

Now here is the big question – what makes the pairs move? Why do they move? Are there events that influence the pairs?

We will explore this in the next chapter.


Key takeaways from this chapter

  1. The Gold Standard system of evaluating currencies existed for a long time, but eventually got phased out
  2. The currency inequality between currencies exist because of political and economic differences between two countries
  3. By volumes, the currency markets is easily one of the largest
  4. The currency markets are open 24 hours, 6 days a week
  5. Currency is traded as pairs
  6. Currency Pairs have a standard format to include Base Currency and Quotation Currency
  7. The Base Currency is always fixed to 1 unit

165 comments

  1. Khyati Verdhan says:

    Hi kartik
    I am waiting a lot for this module. This chapter is good and in easy language. Also like your story about how a girl think 25 euro as 25 rupees which exactly equal to 25*78=1950

  2. Ravi says:

    Thanks for starting Commodity/Currency module.. waiting for long time
    Can you provide calendar date for each chapter .. which chapter published on which date.. because i am visiting Zerodha Varsity almost daily for new chapter, but i didn’t get. 🙁 . because i don’t know schedule of new chapter .

    • Karthik Rangappa says:

      Ravi – setting up a calendar chapter wise is tough. However, I will try and update this as frequently as possible. Thanks.

  3. Ravindra says:

    Good teaching for currency biginers continue it Karthik

  4. someonesceptic says:

    Have been waiting for this module for a long time!! Thank you. And thank you for all previous modules as well.

  5. Hari says:

    YES!!! Finally!!! been waiting too long!!

  6. amit says:

    Really excited to read further articles.
    Pls end this with some currency trading strategies.

  7. chaitanya kale says:

    Thx wait is over.

  8. Tayez7501 says:

    Gaining something already… Thanx Zerodha….

  9. SARAVANA PERUMAL D says:

    Hi Karthik,

    Good day. This module also really superb.

    I think that, the “Interest Rate Futures” short form is “IRF”. But, you typed as “IFR”. Please review the sentence and correct the error.

    Thanks in advance.

  10. Vihang Abhyankar says:

    Hi Kartik,
    You have the unique style of simplifying very complex subject….All modules are really absorbing.. Keep posting such a good stuff ! ! We are waiting your modules / chapters like we are waiting for Chetan Bhagat’s novels ! !

  11. Ritesh says:

    Is forex on cross currency pair legal in India ?

  12. SK says:

    Waiting for pdf modules for 6,8,9,10. All are great modules ever i come across in my life which are in simple language. Hats off to your team.

    • Karthik Rangappa says:

      Glad you liked it 🙂

      Module 8 is in progress….9 and 10 are yet to be completed. We are working 1 module at a time, so this will take some time I guess.

  13. Manu says:

    Thank you so much for your guidance.
    And I wanna know that when you are planning to write about commodities? I am waiting for that for a long time. I wanna start trading in commodities but I don’t have much knowledge about it. Waiting eagerly for commodity module.

  14. SaikiranGarapati says:

    Hi,

    Can you tell me where will get the long term candle stick charts for GBP INR ?

  15. Debojyoty Datta says:

    Nitin Ji,

    I opened a trading account with zerodha with equity sector (NSE,BSE) enabled only but now I want to avail currency feature in my account in that case what should I do ? Plz help

    Thank You

  16. Neeraj says:

    Karthik..You are doing some really fantastic work..Deserves hearty appreciation..I see a book getting published in the very near future..
    Is there any way we can contribute to Zerodha Varsity?

    • Karthik Rangappa says:

      Thanks for the kind words Neeraj. Book of a different kind maybe 🙂

      Yes, of course you can contribute. Please do let us know your thoughts.

  17. Ar Arbit says:

    Why do we need to maintain two seperate accounts for Equaties and Commodities? Why both of these two accounts not get merged?

  18. Debojyoty Datta says:

    Is it possible to trade in eur/usd or anything else like that i mean cross currency in zerodha ?

  19. Debojyoty Datta says:

    If I have already booked profit in january 2017 can I square off february2017 usd/inr currency future in january2017 ?

  20. Debojyoty Datta says:

    Can I tade in february 2017 usd/inr future in the month december2017 ?

    • Debojyoty Datta says:

      Can I tade in february 2017 usd/inr future in the month december 2016

    • Karthik Rangappa says:

      Of course, you can.

      • Debojyoty Datta says:

        Hey Karthik, Can you clarify something to me
        If I have bought 1 lot (1000 units) usd/inr @ Rs 68 which means I have bought 1000 usd at rs 68 each . If the price increases to Rs 69 each it means the value of indian rupee is decreasing and I am making profit of rs 1000 as I have purchased usd on lower price and selling on higher. Is it correct?

  21. Debojyoty Datta says:

    Hi Karthik, In my market watch addition toolbar it is showing NSE, BSE, CDS ok. Now I know CDS for currency but what I don’t no is that the future contracts under this are from NSE or BSE ? Can you tell me how to determine wheather the currency futures are under NSE or BSE.

  22. Debojyoty Datta says:

    Hi there
    On 30.12.2016(Friday) I bought 1lot USD/INR Jan 2017 currency future and untill 5.00pm I was having a loss of 27.5 but when on next day morning 31.12.2016(Saturday) I checked it was showing a loss of 182.5. How is this possible ?

  23. Debojyoty Datta says:

    Hey there, Suppose I am trading 2 lots of usd/inr and my free cash becomes nil (Zero) what would happen then ? Plz guide me

    • Karthik Rangappa says:

      It is always advisable to have some free cash in your trading account. Comes in handy when the position goes against you and you are required to top up your margins.

  24. Debojyoty Datta says:

    What is the time duration of currency market in zerodha I mean from which day to which day and also the market hours ? Is it open on saturday ?

  25. Debojyoty Datta says:

    why I am seeing live trading today (saturday 7.1.2017) is it virtual trading for practise ?

  26. Debojyoty Datta says:

    If I buy USD/INR JAN17 currency future then

    i. What will be the expiry day of any currency ? in my case its usd/inr
    ii. If I don’t want to sell on that day instead I want to convert my position to USD/INR Feb17, Is it permissible if yes what criteria I have to follow in doing this ?

    • Karthik Rangappa says:

      1) Expiry date is mentioned in the contract, you can see it when you select the same.

      2) You will have to rollover. Meaning, you choose to let the Jan position expire and initiate the same position.

  27. Debojyoty Datta says:

    Pls correct me on this
    usdinr future 1Qty = 1000 units
    gbpinr future 1Qty = 1000 units
    eurinr future 1Qty = 1000 units
    jpyinr future 1Qty = ? units

  28. abhishek kumar sah says:

    What do u think is better to trade… F&O of nifty 50 & bank nifty or the commodity and currency market.
    considering the liquidity and the manipulation factor..

    • Karthik Rangappa says:

      Frankly, the choice of instruments does not really matter. It all depends on how you trade the instrument.

  29. 9SR says:

    Suggestion: All the images, charts, graphs etc., if they are numbered according to the module/ chapter number, I feel , referring them would be easier. Another thing is, why this module on currency was not allowed to download as pdf. Thanks

  30. Karan says:

    Thank You for all the resources . These all are very helpful. It would be added advantage if could please make the resources from module 8 to be available in pdf form.

  31. Rohan says:

    Nitin Sir , When will be Cross Currency pair like GBP/USD, EUR/USD available for trading ?

  32. Mayank says:

    Sir, Why I am not able to see JPY/INR July17 and August17 future although I am able to see rest of the Currency Pairs. Attaching image plz help.
    Image- [IMG]http://i66.tinypic.com/e9hnoy.png[/IMG]
    OR
    Direct Link- http://i66.tinypic.com/e9hnoy.png

  33. shafik s says:

    dear sir,
    PDF book links are not provided for last two chapters…will be convenient if provided so as like for previous chapters.
    Thank u.

  34. sunil baliram kabadi / saraswat bank says:

    is any strategy or technical tool for knowing currency direction

  35. MM says:

    Hi Karthik,

    You wrote most of the movement happens When US , UK market is open, however 5pm Indian currency market will get closed however US Market opens at 6:30pm so the major activity in price will be missed . Is this assumption correct.

    ~MM

    • Karthik Rangappa says:

      This is more applicable for commodities. However look for currency moves post EU markets open…which is roughly 13:30 IST.

  36. MMwitho says:

    Hi Karthik,

    My currency pair expired without me closing the position, i was not aware that i need to close the position by 12:30pm on the expiry date thought i can close it 30 minutes prior to the currency market close, Now when i place the order it says the contact has matured…. Can you please let me know how this would pan out.. will my contract get squared off at the closing price or there is any other provision in such scenario, please advise. Thank you.

    -MM

  37. TeJas_Radax says:

    why chapters after 7 are not in PDF form?

  38. MUKUL says:

    Can you provide pdf of module 8 and 9?

  39. Javid Ishraque says:

    Hi,
    I think you forgot about the Interest Rate Futures. I have been waiting for that part.
    Thanks

    • Karthik Rangappa says:

      I was told that the liquidity is not much and hardly any trading participation there. Given this, I was not too keen to spend time writing about it. Perhaps, I will do that sometime later this year.

  40. Darshan says:

    Sir
    when i try to trade GBP/INR futures in kite it always shows me 0-0 ask-bid even though currency market is open and trading. Please advise

    • Karthik Rangappa says:

      Maybe you are looking at the 2nd month contract where the trading activity is low. Can you please double check this once? Thanks.

  41. Rajesh Nirankari says:

    Hi Sir.. recently I saw that upstox has launched scanner that generates algorithm based backtested strategies for novice users. Is sends buy and sell signals based on strategies..do we at ZERODHA also have such a tool .. or planning to come up with some thing on these lines pls advice

  42. Aniket Agrawal says:

    Hello Karthik,
    Your modules are excellent. I just wanted to know if you will make any module on mutual funds

  43. tharun says:

    Hi sir,
    Can we trade currency in option can you guide me how to do it?? procedure in placing order

  44. nishu says:

    Respected Sir,
    What is crypto currencies? please make platform for crypto currencies at zerodha for trading if possible……..thanks……..

  45. Pradeepan A K says:

    Where to do currency trading ? from where the amount will get deducted from equity or commodity ?
    or is there any separate CDS trading account . Please guide .

  46. Milind Nirgude says:

    Is foreign currency pair trading like usdjpy, eurusd in foreign exchanges legal or illegal?

  47. prakash says:

    THERE IS DEFINITELY CLASS IN ALL YOUR MODULES AND VIDEOS THAT YOU PROVIDE WHICH WHEN COUPLED WITH KITE AND PI IS DEFINITELY AUGMENTING THE KNOWLEDGE AND BOOSTING THE CONFIDENCE OF THE NEW TRADERS. BEST WISHES TO THE ENTIRE TEAM.

  48. Raja says:

    I always wondered how currency can be issued against gold. Shouldt it be good & services produced by the country?! Pls suggest a book on Forex history! Thanks! 🙂

    • Karthik Rangappa says:

      I’m really sure if there is a book on the history of foreign exchange, maybe you can suggest the same to me if you happen to find a good book 🙂

      Happy learning!

  49. Saeed Ahmad Khan says:

    Hi, is there any plan for NCDEX platform in future? KapasKhali & SoyaRefine is missing.

  50. Mithun Nandi says:

    As Like MCX Gold option Zerodha also failed to give the facilities to their cleint Cross Currency Trading

  51. Ravi Singh Shekhawat says:

    For how long can I short usd/in futures.

    I’ve been going through charts for a while now,

    Can I short currency at 66.25 on 20/10/2017 and buy it back at 63.20 on 15/2/2018 with 15 lots

    Can I short such huge price change for such a long duration.

    Is it practically possible?
    What is recommended?

    • Karthik Rangappa says:

      Although there are long-dated futures, it may not be practical to trade them as the liquidity is quite low. It is best you stick to the current month contract and keep rolling over the same.

  52. Mithun Nandi says:

    Can any Client gues that Zerodha will ever be able to give the facilities to trade cross currency & MCX gold option. I think that Zerodha never can do this.

    • Karthik Rangappa says:

      Mithun – I really don’t have a timeline on this. All I can say is that we will eventually have these contracts on our platform. Hopefully really soon.

  53. Virendra Nirmalkar says:

    Hello sir, thank you for such a good explanation.

    REQUEST :
    1. KITE does not show Reference RBI USD/INR. However, it shows future. But future is misguiding for any position. Please add the reference currency.

    2. Can you please make strategy / spreads calculator?

  54. Amit Pandey says:

    Sir currency pair chart in foreign exchange are continuous where as in india there is lot of gapup and gap down.
    So whether we should trade based on indian chart or foreign exchange chart?

    • Karthik Rangappa says:

      I’d suggest you look at the charts here as eventually the trades too would get placed on the exchanges here.

  55. Varun says:

    Exchanges has started trading for cross currency pairs (EUR/USD, GBP/USD……) even i can see the quotes on Kite platform. But Zerodha team denies saying that its not yet live.

    Why is it taking so much of time to go live. To my knowledge, exchange houses have waive off transaction charges till Aug 2018 to encourage the trade in cross currency pairs

    When it is gonna be active @ Zerodha ??

  56. Shivprasad says:

    Please let me know the procedure to buy gold (commodities) in Zerodha. Also the detailed information for commodities.

    • Karthik Rangappa says:

      The procedure to buy Gold is pretty much the same as buying stocks. By the way, this entire module is dedicated to learning about commodities.

  57. swati says:

    if we buy some stock currency usdinr and sell on same days. how many time in one day we can do it and how many charges for that trading

    • Karthik Rangappa says:

      Swati, you can do this as many times as you want. Each time you do, a brokerage of Rs.20 is applicable per leg. But my advice – trading multiple times a day does not mean you make more profits, it simply means you are over trading, which is not really the best thing to do 🙂

  58. Jignesh says:

    Can we trade BSE weekly USDINR options in Zerodha? I can’t add them in watchlist. Please suggest.

  59. Talavane Srirama says:

    I am not able to trade cross currency pairs… actually iam not able add these pairs eg: gbpusd , eurusd, usdjpy.. please help.

  60. Prasad says:

    Hi good evening Karthik. Are cross currency pairs ( like EUR/USD, GBP/USD, USD/JPY, EUR/JPY etc ) available in India for spot trading. I mean not through derivatives. Thanks

    • Karthik Rangappa says:

      Nope, there is no spot market for this. Only derivatives.

      • Prasad says:

        Thank you Karthik for the response.
        I have a situation here and hope you can guide me. I am an NRI and trading above mentioned pairs on spot forex, with good success rate. Depending on spot data available, I will open a trade, gain ( 10 – 15 pips per trade X N number of lots ) and close the deal, normally with in 2-3 hours of opening the trade.
        Now I will be relocating to India and will become Resident Indian. So for me spot forex will not be available and I have to trade on derivatives only. Can you please clarify on following 2 points.
        1. As I don’t have much understanding about derivatives, can you pls suggest 1/2 good sites from where I can understand mechanism of Currency Derivatives and how do they work?
        2. Is it possible to apply above mentioned 10-15 pip strategy in currency derivatives too and close the trades in 2-3 hours from opening?

        Thanks & Regards.

  61. UTTAM KALIKA says:

    Hello sir

    I am CA final student and forex and derivative is important part of our curriculum..

    You told $/₹ = 67/68 but in my books they often quote price like this ₹/$ 59/60 and told that we can buy one $ for 60rs your quotation is diffrent

  62. Sharath says:

    Where to fund money to trade in currency?
    Equity or commodity…..

  63. Sasi Rekha says:

    Hi.. I want to open currecty trading account what is the process… It’s come under equity or any other one… Kindly clarify

  64. Pankaj Parmar says:

    Hello Team,

    I hold the Zerodha account. I have query related to FX trade.

    I want to invest some INR 10000 to purchase Venezuelan Bolivar(VEF). Could you please assist me on this?

    Thanks
    Pankaj

  65. aanchal says:

    Hello ,
    Why I am not able to sell gbp/inr May futures, earlier it was possible. I have sufficient margins with me. Now what is the problem.

    Thank you.

  66. abhishek kumar sah says:

    from where can i look at the underlying chart for USDINR? because in futures contracts I am not able to look at more than 1 year of candles.

  67. HazeeM says:

    Hello,
    can you pls include in next chapter the Tax rayes of USDINR in future currency .I can’t calculate it

  68. DFW says:

    Hi Karthik,

    Good day! I see comments from June 2018 saying Zerodha will be rolling out cross currency pairs ‘soon’ and that you’re testing stuff internally? It’s June 2019 now, so would you be able to kindly offer any update? Would be a welcome boost if Zerodha can make this available. Reading price action on the INR pairs over the last few months has been very challenging with no clear trend either way. It seems the “non-price factors” such as fundamentals, Nifty/Sensex movements, oil price movements that drive INR pairs have a lot more influence on how it moves. Any suggestions on how to get a better grasp of the trading the INR pairs? I’ve tried both positional and scalping and failing miserably. I find the price action on the cross-currency pairs are more easily readable. Thanks!

    • Karthik Rangappa says:

      Of course, the fundamentals play a huge role in driving the price. By the way, why do you call them non-price factors? These are core price factors. I think positional trades are far better than scalping. I’d suggest you stick to that and try to better your trades.

      Cross currencies, frankly I don’t have visibility yet.

  69. DFW says:

    Sorry, could’ve termed it better than “non-price” factors. I understand fundamentals are the foundation of price movements. What I really meant to say is that when I’m trading the Nifty or a stock , 7 or 8 out of 10 times I see it respect certain price levels within a structure. With the USD INR these price levels on market structure is really quite random (very difficult to find an edge), especially when day trading and hence one gets the feel that the prices are reacting to something else, than what one is seeing on the chart. Positional trades the USD INR has been all over the place, it gaps up, gaps down every other day.

    Anyway thanks for your inputs, it’s a real shame that cross currencies can’t be expedited.

    • Karthik Rangappa says:

      The gaps are due to the illiquid nature of the contract. In fact, price levels and all of its variants work beautifully well when there is liquidity in the market/instrument. Trust me, cross currency pairs are even worse in terms of liquidity. Frankly, you aren’t missing much, especially if your agenda is to find short term trades in these contracts. However, please don’t mistake me for justifying why the contract is not available yet on our platform.

  70. DFW says:

    I see, thanks for clarifying Karthik.

  71. amu singh says:

    What are brokerage charges on forex futures in zerodha?

  72. durgesh kumar says:

    Hindi me kare

  73. Shyamal says:

    Strange !
    Today when I opened my account at 7.00 AM some of my positions were missing in my position list. I give below the details.
    Currency Options
    December Expiry:
    60 Lot of 73 PE was missing, 60 Lots of 73 CE was there
    60 Lot of 72.5 CE was missing, 60 Lots of 72.5 PE was there
    60 Lots of 71.5 PE was missing, 60 Lots of 71.5 CE was there

    29th Nov Expiry:
    205 Lots of 72 PE was missing, 205 lots of 72 CE was there
    205 lots of 71.5 PE was missing, 205 Lots of 71.5 CE was there

    Any specific reason for this strange missing. Its scary!!!!

  74. Shyamal says:

    Yah List was fine by 8.30 AM. Thanks.

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