Hey, intraday leverage could be gone soon so I was looking at other instruments and noticed that there is a huge difference between price change in USDINR and the CDS by NSE. The actual currency pair is up 0.24% but the CDS is at 0%? Why is this?
Initially, due to time synchronization variations. Change of % is calculated based on previous day close. Currency trading for resident Indians start at 9 am & stop at 5 pm. But INR currency pairs keep trading outside of India beyond this time frame allowed for CDS segment. International markets take the closing price of INR pairs not based on IST 5 pm. Their closing price’ timing is different. So, % calculation mismatch. Time synchronization variations also create gap ups & gap downs.
Currency trading in India not running for 24 hours x 5 days and this creates huge disadvantages/drawbacks for resident Indian currency traders.
Secondly see, there (in the picture) is a difference between displaying prices, on the LHS spot is 71.2375 & on the RHS 29JAN’20 futures contract’s price is 71.2575. Futures contract’s price derived using futures pricing formula, which is time dependent. Please, study following article:
Also, one should consider RBI Reference Rates. Please, study following article:
I see No point in pursuing this then, I guess… Even if I figured out the direction, the CDS won’t move in that direction
I did not quit CDS currency pair trading forever, I just paused it for the time being until it’s allowed time frame becomes 24 hours x 5 days in synchronization with the International markets.
In the meantime, I will continue to study INR currency pairs through paper/virtual trading.
Yup, I haven’t given up on it either. It’s just that there is no point in it until the playing field is leveled. The lack of volatility and the super high leverage actually makes currency far more interesting than stocks…
Yes, it happened with me. I should not foolishly say that the currency market reversed to my direction most of the time, rather I should understand that there are different sporadic events happening around the world which drives the currency markets. Mastering currency markets requires lots of time & study.
Nothing’s easy and no one has absolute knowledge of how the market will move, still, if currency trading was 24x5 in India, I’d give up trading stocks/index altogether… It’s a dream instrument for someone who’s good at position management…
There are hidden gems inside those financial instruments discovered by Mr. Warren Buffett. I’m a big fan of him.