USD/INR Trading Tutorial

If you are a new trader, your main goal is to trade safely. This is why you need a forex pair like the USD/INR currency combination. This pair has low volatility, and its fluctuations are reduced by regulations from the Indian central bank known as the RBI (Reserve Bank of India). 

Expert traders take positions on the USDINR pair for two significant reasons. Firstly, it has the reserve currency in the world, the American dollar. Secondly, it is less volatile and produces low risk. Thanks to the emerging Indian GDP, the Rupees is the 20th most transacted currency.

What is USD/INR Trading?

The USD/INR exchange pair represents the exchange rate between the US dollar and the Indian rupee. The forex pair informs the dealer of the number of Indian rupees required to acquire one American dollar. In this fx pair, USD represents the base currency while INR represents the quoted currency. 

Price History of USD/INR

Currently, the Indian rupee is worth less than the US dollar. Nevertheless, this was not always the situation in the past when India gained independence in 1947. At that time, 1 INR was equivalent to 1 USD.

There are different suggestions as to why one Indian rupee had a higher worth in 1947. However, it is widely assumed that there were no measuring units. This implied that all currencies were equivalent.

Others argue that since India had been a British colony before 1947, the INR was worth more as the GBP was worth more. In 1947, 1 pound was worth 13.37 INR. Therefore the dollar exchange rate should have been INR 4.16.

Following India’s sovereignty in 1947, the INR has steadily depreciated against the US dollar. The federal funds rate in the US has remained relatively unchanged over the previous ten years, hovering about 0.25 per cent. This has an impact on the current INR/USD exchange rate.

You can observe the fluctuating worth of the USD vs INR by viewing a graph over time. When you look at the fluctuations from 1947 to now, you’ll find that the currency value has virtually always risen. This should present an overview of the INR direction, where it has been, and where it is today.

The Best Way to Trade USD/INR

The USD Index (DXY) is used to assess the price of the USD/INR. This is composed of a variety of denominations linked to the United States’ vital economic allies. These include currencies like JPY, CAD, EUR, CHF, and GBP. Whenever the dollar strengthens versus these economies, the index rises, and if it declines, it drops.

This is a fantastic way to remain on top of price movements. Annual trends and graphs differ, but monitoring the dollar index is a beautiful way to keep on top of the economic mood.

Candlestick Analysis for USD/INR trading

In brokerage firms, there are several distinct sorts of real-time forex indicators. For trading USD/INR, though, investors generally find the D1 or W1 candlestick pattern most beneficial. Many prominent exchanges, like Oanda, offer historical plots that may show you yesterday’s value and future currency rate projections.

A candlestick plot is a charting used to analyze currency spot rate fluctuations, like USD/INR contracts, equities, or options. For a given period, the analytical chart displays four essential elements of data: the entry and closure and the rising and falling.

Every candle on a USD/INR currency pair will develop over 30 minutes if the timeframe is configured to 30 minutes. Each candle will emerge within 15 minutes if configured to a 15 min time frame.

USD vs INR statistics are available for one or two decades and even five years. They can display the day’s peaks and valleys, as well as USD against INR patterns and projections for the coming days, and give immediate quotations via the brokerage firm. It’s also possible to map support and resistance points.

Top exchanges also transform analytical findings into user-friendly trade resources and offer predictions about the current USD/INR movement. Yearly and quarterly trends, trade watch boards, and user-friendly currency computations are also prevalent, as are real-time, daily, and weekly predictions. You may have to contact the firm’s assistance staff for money management, fluctuation indexes, and futures pricing.

Benefits of Trading USD/INR Forex Pairs

Out of all the unconventional combinations, the USD/INR is becoming increasingly famous. The pair’s forecast strives to improve as India’s manufacturing and financial climate keep developing and expanding. For financial professionals, exchanging the duo is becoming an appealing financial option.

• Recognition: The US dollar is the most widely traded asset in the foreign exchange industry. It is responsible for over 88 per cent of all currency exchange operations. With roughly US$53 billion worth of INR exchanged every day, the INR ranks as number 20 among other world currencies.
• Security: The US dollar is often regarded as the most secure asset on the globe. The USD accounts for the majority of worldwide foreign exchange trade.
• Safe from fluctuation: The Indian national currency is traded on a ‘controlled float’ while exchanging USD/INR. This implies that the INR spot value is set by supply and demand, although it is partly shielded from instability by the Reserve Bank of India’s commercial transactions of USD/INR (RBI).
• Past data: The USD is one of the most widely used reserve currencies. Because of its magnitude, historical currency value statistics on the combination are easily accessible from sources such as the NSE. This also renders it pretty simple to understand.

What Affects USD/INR Forex Pairs

When investing USD/INR, it’s critical to have a strong understanding of future patterns and forecasts. This may be obtained by looking at the most current developments to evaluate how the exchange rate is behaving now compared to its historical performance.

In previous years, the US dollar has surpassed the developing Indian rupee. The Reserve Bank of India’s involvement played a factor in the forex pairing’s stabilization.

Generally, the dollar is stronger than the rupee since most financial institutions worldwide keep it in custody. It is also used in a vast number of foreign trades. The US dollar’s capacity to retain its value makes it consistent. This is why individuals continue to buy the US dollar since it is deemed safe.

On the other hand, the Rupees is often affected by purchases from the Reserve Bank of India (RBI). The country’s central bank purchases greenbacks from the exchange regularly. The rupee’s flexibility rises as a result of this. The rise in currency production without a commensurate rise in prices causes the rupee to fall further than the USD.

However, there have been occasions when the USD/INR value has shifted. A historic infusion of dollars has previously boosted the INR value via capital flows from both countries. 

How the American Economy impacts USD/INR value

The USA has the earth’s biggest GDP. To adopt an efficient approach when investing in the currency pair, it’s vital to consider the structure of the US economic system and what impacts the greenback. These factors are as follows:

• Like other fiat money, the dollar price is determined by the United States’ business growth and prospects.
• The finance industry is the greatest source of US income. Banking, property investment, insurance, technical and commercial activities, and healthcare are all included.
• The US industry is highly open. This implies it can benefit the nation to attract both adaptable business profits and outright foreign participation.
• Data about the labor economy might have an impact on the dollar. This comprises non-farm payroll (NFP) statistics, poverty levels, Gross domestic product and inflation statistics, as well as the Federal Reserve’s borrowing costs.
• Market behavior and diplomatic uncertainty, which fluctuates at various periods, can also impact the USD’s worth on the global market.

How the Indian Economy impacts USD/INR value

The agricultural and professional companies in India have propelled the country’s GDP to new heights. When it comes to trading in the USD/INR, knowing its movers will assist you in making better judgments.

• India has the world’s fifth-largest GDP. The nation also boasts one of the world’s most significant populace, with over 1 billion people.
• India has a robust economy that is mainly focused on manufacturing and agriculture. Farming employs 50% of India’s workforce. In the previous decade, agriculture alone has grown at a further than 5% each year.
• ICT, commercial exporting, and software solutions contribute to around 60% of India’s industrial prosperity.
• After the 1990s, the country’s economy has been relatively open. Throughout the previous few decades, this has aided in the acceleration of economic expansion.
• Nevertheless, rigid corporate regulations, pervasive corruption, and income inequalities frequently stifle India’s economic growth.
• Higher US FED interest rates, for example, seek to deter investments from developing market nations like India. This is because traders in the United States are looking for higher returns.

How to Choose The Best USD/INR Trading Broker

Selecting a credible forex broker for trading USD/INR is your next move. Keep in mind that the firm you choose will be tasked with keeping your funds. As such, you have to make sure that money is independent from the organization processes. 

This is often termed as “distinguishing the accounts.” Only this method will guarantee that you may remove your profit with confidence. So, what variables should you consider when selecting a broker to trade the USD/INR market?

Financial instruments: the dollar-rupee pair is one of the exotic pairs that may not be found on every broker. Therefore, you must find a broker that offers this pair among its financial instruments. 

Leverage: Enabling a trader to handle a significant quantity of investment with little funds put in their accounts is referred to as leveraging. The greater the deal quantities you can execute, the greater leverage a brokerage gives. However, employing too much is extremely risky. Therefore it’s critical to establish a relationship between price and possible return.

Fees, charges, and margins: You will want to maintain your prices low, as with any monetary effort. As a trader, your major expenses will be commission and the gap between the bid and ask prices.

Trading interface: To maximize your likelihood of succeeding, you’ll want to choose the most acceptable brokerage account for your USD/INR trading. You ought to utilize the system on your chosen device, whether it’s a workstation, cellphone, or tablet. Whatever trading platform you use, it must be extremely stable.

Account: Several brokers provide multiple types of trading accounts. This is usually based on your initial deposit and how you wish to conduct your transactions. Some accounts will operate on a trading counter, where the brokerage will carry the transaction on their ledger. Small lot sizes are frequently suited for dealing-desk transactions. An ECN account is another account that links buyers and sellers immediately without a trading desk, resulting in reduced spreads. ECN accounts, on the other hand, are often designated for bigger accounts with greater most minor deposits.

Deposit Requirement: A basic thing to ask yourself is if you can satisfy the minimum investment criteria of your preferred broker.

Security against Negative Balance: Due to large movements, a deal may rapidly go against you that your wallet registers a negative return. This is why you need a broker that provides a negative balance insurance option to defend against this.

Forex apps: Your brokerage must make a trading app available if you wish to trade from a smartphone or tablet. DailyForex recommends all of the Indian Forex firms that provide trading applications for smartphones and tablets.

Support team: Good customer support can swiftly and effectively handle problems and conflicts. You should be able to contact your Forex broker’s customer care at times that are suitable for you. Also, you should be able to contact them through different media channels.

Conclusion

The USD/INR currency pair is an excellent place to start for investors interested in exotic pairings. The Rupees is slightly shielded from price volatility, whereas the USD is regarded as the most floating economy globally. The continued development of the Indian market has also contributed to the FX pair’s current attractiveness as an asset. 

FAQ

Cross currency trading is the process of buying one currency and selling another at the same time. Currency traders are people who want to make money in the short term. By finding differences between foreign exchange rates.

When a cross-currency trade goes right, both currencies can be bought or sold simultaneously. But when it goes wrong, it results in an open position that requires particular attention to ensure you don’t rack up large losses.

To understand how cross-currency trading works. Let’s start with a simplified example using U.S. dollars (USD) and Indian rupees (INR).

In our example, a trader who wants to buy 10,000 USD might find it cheaper if they first purchase 15,000 rupees. And then convert those rupees into dollars.

This process of buying one currency and selling another at the same time is called “cross-currency trading”. When you buy the INR/USD pair (also known as trading in the counter currency). You are effectively making two trades:

• You sell (or short) INR (the base currency or primary quote currency), and
• You simultaneously buy USD (the quoted or secondary currency).

Currency traders often refer to this as a “two-step” or “double” trade.

USD/INR Trading Step-by-Step

Step 1: You sell (or short) INR

To get started, you need to have funds deposited in a trading account. In the forex market, you open a position by selling one currency and buying another in the same transaction. When you enter a trade, in your trading platform and close it out, this is called “closing” the position.

If we want to do a USD/INR trade, we can’t just go around blindly trying to sell USD and buy INR. Like we would with stocks or other assets. The process of determining whether or not there is someone who will take your trade is called “funding liquidity”.

To find liquidity when trading in the INR/USD pair, we first need to sell some USD and then try to buy back more INR than we sold. If we can do that, we will make an INR profit of the difference (minus commissions and spreads).

Step 2: You simultaneously buy USD

When you close a position like this by buying more INR than you sold, you are “buying” or going long on the INR. Without getting into too much detail, let’s just say that when traders go long on a currency, they are hoping that it will go up in value relative to another.

Now if the price of one dollar is equal to 40 rupees, traders hope that in the future, the value of their rupees will increase to 50 or 60. This is because, in the long run, a currency’s value should move towards its purchasing power.

What this means is that it will cost more money to buy one dollar because each rupee will have less ability to buy things.

Step 3: You get paid

So if you sold USD/INR at 1.8630 and simultaneously bought back 1 USD for >40 INR, your trade went well! On a $10,000 trade, this would mean a profit of $530 minus trading fees. 

This works out to a 0.53% return on capital in just a few minutes! Not bad considering these markets usually see daily movements of 100 pips or more…

Step 4: Repeat to build your account

Now try to repeat this process of buying and selling until one of two things happen: 1) You run out of money, or 2) The cost of trading becomes too high. If you lose all your money, just click “reset” and start back at step one!

Takeaway…

It’s important to note that sometimes traders may also go short on the INR. Meaning they intend to sell some rupees and later buy them back (or close out the position) at a lower rate.

This is not common with cross-currency trading, but it can be done. You might do this if you expect that the USD is going to go up in value against the INR over time. If that happens, speculators may attempt to sell the INR in the future when it is worth, less in USD.

You can trade across currencies. This will help you to diversify your portfolio and explore different markets. Before you do this, make sure that you research the different currencies and how they interact with each other.

If you’re interested in trading forex, one of our recommended brokers is RoboForex – a reliable broker with low spreads, and tight margins.

Trading Strategies, USD/INR

There are plenty of different strategies that traders can use when crossing currencies. One such strategy is known as the “delta hedge.”

Delta Hedge

Essentially, this strategy is used when one wants to make a trade with the expectation that the trade will either generate a profit or incur a loss.

Here’s an example: Suppose you want to sell USD but are unsure if it will generate a profit or incur a loss. So, instead of taking the risk of incurring a loss, you decide to make two trades simultaneously.

One in which you buy USD and one in which you sell USD. This way, you still end up with the same amount of money regardless of what happens.

Covered Trading

With this strategy, a trader holds an equal number of the base currency as they do units in the quote currency. For example, if you have three USD and five INR, you would close with no position on USD/INR trading.

The benefit of this strategy is that you don’t need to worry about fluctuating market conditions. As long as your trade stays within those parameters. To use this strategy, you must first cover your position.

Covered trading is sometimes referred to as “flat” or “square.” This covers all possible profitable trades but leaves one with the possibility of incurring losses.

The above-mentioned strategies are just some examples of how traders work in the Forex market.

Swing Trading

In this strategy, the trader closes positions that are less than one unit and then opens new positions. For example, if you currently hold two units of USD/INR. You would close that position and open a new one with 1 unit of USD/INR.

The benefit of this strategy is that by covering the first trade. The trader has only lost (or won) half a unit instead of losing (or gaining) one full unit.

With this method, the trader could make money even if the market remains flat.

Scalping

Scalping is a way of profiting from a very short-term movement in the price of a Forex pair. With this strategy, traders open and close trades rapidly to take advantage of small changes in the market.

Normally, when an asset has very few swings in its price, it’s difficult to make money using this method. But since currencies have frequent fluctuations in their prices, scalping is a great way for people to profit from them quickly.

Scalping is when you make lots of trades in a few minutes. It increases trading activity. Trading moves more when people are making a lot of little trades.

Long-Term Trading

The long-term trader is somebody who is often in the trade for quite some time. This strategy is often used when somebody predicts there will be a significant change in the price of an asset within an extended period.

Long-term traders are very careful with their risk management. Their strategy allows them to take more risks than the other traders because they are aiming for larger gains than anybody else.

Many people use trading strategies to trade based on changes in economic factors. Such as changes in interest rates, GDP growth, or changes in supply and demand for goods and services.

The result that they are trying to achieve is different from the trader who uses a short-term or intermediate-term strategy.

Day Trading

This is a very short-term strategy, where people buy and sell assets on the same day. The person using this strategy will open and close all of his/her trades over one single trading session.

With Day Trading, it’s possible to profit with larger swings in prices. So it can be difficult to manage your risk correctly with this method. But if you have the necessary experience, it’s effective at producing high returns for your investment capital.

This is not a long-term trading approach because you must trade every day when the market is open!

Note: Always practice first on a demo trading account until you are consistently profitable. Demo trading can help to shape your trading strategy, find your strengths and weaknesses as well as allow you to practice risk management.

The Best News Trading Tricks

News trading is the most unpredictable kind of trading. The timing is critical, and it’s very hard to catch the wave at its crest. But this also makes it exciting.

Trading News Disclosures

When a significant event happens, it can affect the prices. They will either go up or down from where they were before the event. For this reason, it is usually advantageous for futures traders who get new information before their peers do.

Such as government announcements of important economic numbers. GDP and unemployment reports, etc. And act on that information by initiating trades in anticipation of a price movement.

The Importance of Timing

The difference between a successful trader and a losing one is the successful person’s ability to enter and exit trades at the right time. Because news announcements can cause prices to move quickly. A trader who enters a trade too late may find that he or she has lost money or missed out on potential profits.

A trader who is confident in his or her timing skills should trade on the news. That way, they will make money if their timing is right. Don’t close your positions shortly after the announcement. 

So you won’t be exposed to any volatility that could occur after the market digests new information.

Trade with Market Sentiment

Many traders believe that it is not necessary to trade news releases. Because they are widely available to the market as a whole. In reality, advanced traders have an advantage over those who trade simply on news releases.

Some investors just buy stocks. Because they know that the market’s reaction to news announcements is a strong indication of the future direction of a stock. 

This means that if the price of something goes up after something good happens, it might be bullish. But if the price falls after something bad happens, then it might be bearish.

Be Careful When Trading During Release Times

One of the most dangerous things about trading currency pairs is that it can be hard to find an exchange. Where you can buy and sell at the same time without paying a large spread.

If there’s widespread between buying and selling prices. You’ll end up losing money regardless of whether your trade is profitable. This means it can be difficult to know if you are trading on good news or bad news until after the event has occurred.

Trade Volatile Markets

If traders trade before an announcement, they should trade in less liquid markets. That way they will have a bigger effect on the price of that market.

Increased volatility means that people are buying things more quickly. This often results in more opportunities to make a profit, but it also means you have less room for mistakes. 

The best times to trade on news are when key economic numbers are released that are linked to growth or inflation expectations.

News Trading is Psychological

It’s easy to get caught up in herd mentality when things are going well everyone wants to buy after good news so prices keep rising. And everyone hates losing money so most people think they should sell out before things turn.

Without a plan, it’s easy to get caught up in the emotions of the market. Which causes you to jump in too early or too late and fool yourself into thinking bad news is good news.

By practicing beforehand, you’ll improve your ability to trade on news events until you feel more comfortable.

You can also reduce the stress of live trading by knowing that even professional traders make mistakes from time to time. As long as they understand why they are making those mistakes, it’s not a big deal. As with anything new, practice is the best way to improve your skills for future news events.

News Trades vs Other Trades

When trading stocks based on fundamental data, you don’t have to follow it very closely. A regular cycle of research and analysis will tell you when some news is coming. Which means you can make a trade whenever the opportunity presents itself.

On the other hand, with news trading, your chance for success depends on how well you time your reaction to the event. So if this is what makes or breaks your whole strategy. 

Then I believe that not paying enough attention is one of the best ways to fail at news trading.

Other trades can be made during news releases. It’s just that when there are news releases, there are more opportunities for making profits or losses. If you can’t pay attention to what happens at these times, you should probably stick to trading on other events.

The more you trade, the better you’ll get at it with time and practice. Over time, your risk management skills will improve so that you know when to take a loss or cut your profits short.