1.

Introduction

Project Proposed: Currency trading

Objective of the project:

 To study currency trading.
 To study about the usage and utility, hedging and arbitrage in currency trading.
 To study about the factors deciding currency fluctuation.
 To study about currency trading in India.
 What are the instruments to protect any losses from currency fluctuation?
 To study about the initiatives taken by Indian government for currency trading.
 What are the major participants in currency trading?
 To study about currency exchange and currency exchange rates
 To study about hedging in currency trading.
 As company has started dealing in currency trading with NSE six months ago, so
it will help company in explaining to their clients regarding currency trading.
Methodology

1) Primary Data Sources:-

The methodology used is to study currency trading and its usage and utility, hedging and
arbitrage in currency trading. To study about factors deciding currency fluctuation. What
are the instruments to protect losses from currency fluctuation? How currency trading is
done. Currency trading in India. What are the initiatives taken by Indian government for
currency trading? Who are major participants in currency trading?

2) Secondary Data Sources: -

To keep pace with the existing market I seek to consult various existing data also in the
related company products so that a comparative study is formulated. The sources to be
used includes internet, friends working in other companies, faculty members, books.
Limitations of The Study

 Study is limited to currency trading and its usage and utility.

 Study is limited to currency exchange and factors deciding currency fluctuations.
 Study is limited to forex exchange and how forex trading is done.
 Study is limited to forex brokers.
 Study is limited to currency trading in India.
 Owing to the dynamic nature of the global economy in particular, the findings of the
report will not be applicable after a point of time.
 No practical access to global market exchanges.
 Time constraint.
SYNOPSIS OF THE PROJECT:
This project is about currency trading, its usage and utility, what are hedging and arbitrage
in currency trading. How is currency trading done? What are its operations? What is pricing
in currency trading. What are factors deciding currency fluctuations. What are instruments
to protect any losses from currency fluctuation? How trading is done. What are initiatives
taken by Indian government for currency trading? Who are major participants in currency
trading? What is currency trading system? How hedging is done in currency trading. What
are currency trading platforms? How is currency trading done online? How is currency
trading done online? What is forex trading and forex trading in India?

CURRENCY TRADING
Currency trading means to exchange one currency for another currency is termed as
currency trading. This industry is one of the largest in the world with regards to trading
volume. Foreign currency is the ratio of one currency in consideration with another. How
this process takes place. For example if we take an interbank currency trade for instance,
there are two banks A and B. Then bank A will call bank B and will ask for the quote of the
currency. For example rupee against the dollar. Then bank B will reply to bank A with the
rate of his bank. If the rate seems attractive to bank A then they will enter a deal. All the
basic information like price, amount, and purchased amount will be entered in their
systems. When the actual settlement takes place bank A will depart with the specified rupee
amount and bank B will follow suit by turning in the dollar amount. If the rupee rises against
the dollar then bank A will gain the difference as profit.

When traders enter into currency trading they give a two- way quote. One of them is the
rate of purchase and other is the price of sale. The two prices are mainly separated by a
hyphen. On the left is the price at which the trader will purchase and on the right is the price
at which is the price at which the trader will sell. The difference between the purchase rate
and sale is called the bid-ask spread. The trader expects the slight variations on the sale and
purchase rate. He will also trade in the similar amounts of what he had purchased. There
will not be any drastic differences. The margin thus earned by the trader is the difference of
the bid-ask spread.

The profit gained depends on the variation in the exchange rate and the size of the position.
Speculating over a period of time can be dangerous and hence every government has the
strict rules laid down which have to be adhered to, to prevent the chaos.