A NSE currency future, also known as an Currency derivatives or a foreign exchange future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date. Typically, here base currencies is the Indian rupee.
The forex spot market is the largest market in the world. Currency futures trade at a fraction of the volume, with many currency futures contracts trading under high volume and good liquidity. NSE Currency futures has Tick size of 0.25 paise or INR 0.0025.
Indian Currency market trading hours are from Monday to Friday From 9:00 a.m. to 5:00 p.m.
Currency future Last trading day is two working days prior to the last business day of the expiry month at 12:30 pm.
Currency future Daily settlement price (DSP) is Calculated on the basis of the last half an hour weighted average price.
Currency lot size in India
On NSE, rupee is paired against euro, pound, yen and US dollar. In currency future first currency is base currency while second currency is quote or counter currency. For example: in USDINR future, US dollar is base currency while INR is quote currency.
Euro rupee future: 1 lots equal to 1000 euros.
Pound rupee future: 1 lots equal to 1000 sterling.
Yen rupee future: 1 lots equal to 100000 yens.
Dollar rupee future: 1 lots equal to 1000 dollars.
Currency margin calculation
For currency margin is set by exchanges comes around 2 to 4% of total value of contract.
For example: euro rupee future is currently trading at 74.18 and its lot size is 1000 so total value of 1 lot is comes at 74180. Currently for buying or selling euro rupee 1 lot exchange collect around 1710 rupee which comes as 2.3% margin of total value. RBI and exchanges changes margin time to time after accessing market wide risk and positions.
Same way other currency pairs current margins are:
Pound rupee future current market price is 83.28. 1 lot margin is 2083 rupee which comes around 2.5% of total value.
Yen rupee future currently trading at 57.06 and 1 lot margin required is 1722 rupees. Which comes around 3% of total value.
Dollar rupee future currently trading at 64.69 and 1 lot margin required is 1296 rupees. Which comes around 2% of total value.
Currency profit loss calculation
We saw lot size and margin calculation information about currency futures. Now we will see profit and loss calculation of currency future with examples.
In currency trading, in simple words each 1 rupee movement means 1000 rupees profit or loss per lot.
If you buy dollar rupee future 1 lot at 64.5 with stop loss 64 and for target 65.5. Then you are taking 0.5 rupee or 500 rupee per lot risk and going for 1 rupee or 1000 rupees per lot profit. Same applies for euro rupee, pound rupee and yen rupee future pairs.
So for 1 lot of dollar rupee you pay margin of 1296 rupee with 0.5 rupee stop loss taking risk of 500 rupees per lot which comes 39% of paid margin money and target is 1 rupee or 1000 rupees which comes 77% plus of margin money. That why currency trading is relatively very high risk and high return business and requires less capital as compared to other trading instruments.
I hope this basic information will clear some of doubt about currency trading for new investors and traders.