FAQ

Most frequent questions and answers

Equity Derivative

Commodity

Currency

Mutual Fund

Currency Derivatives are futures and options contract where you can buy or sell specific quantities of a particular currency pair at a pre-determined future date.Currency Derivative Trading is similar to Stock Futures and Options trading. However, the underlying asset are currency pairs (such as USDINR or EURINR) instead of Stocks. The major participants of Currency Trading in India are banks, corporations, exporters and importers.

Offers diversification to your investments–
Hedging opportunities to Importers & exporters, for their future payables and receivables.
Gives trading opportunities because of volatility in currency
Provides transparent rates to traders as it is exchange-traded

Forex Trading is done in currency pairs such as.
US Dollar –Indian Rupee Contract (USD-INR)
British Pound –Indian Rupee Contract (GBP –INR)
Japanese Yen –Indian Rupee Contract (JPY-INR)
Euro –Indian Rupee Contract (EUR-INR)

Hedging refers to taking a position in the future market which is opposite to a position in the physical market. Hedging is done with a view to reduce or limit the risk associated with unpredictable changes in the exchange rate.

RISK DISCLOSURES ON DERIVATIVES

  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to ₹ 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.

Source :

SEBI study dated January 25, 2023 on "Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment", wherein Aggregate Level findings are based on annual Profit/Loss incurred by individual traders in equity F&O during FY 2021-22.