Like in the case of futures trading in stocks, indices and commodities; currency trading is also based on minimum lot size. The only difference is that the lot size in currency trading is defined in value terms and not on quantity terms. The minimum lot size for a USD/INR pair is $1000, which is the equivalent of Rs.71,000 approximately. Similarly for the Euro Pair it is €1000 and in case of UK pound the lot value is UK£1000.

Let us also look at the tick sizes with respect to currency futures trading and the contract expiry. Currency derivative contracts will expire on the last working day of the month. At any point there will be a total of 12 monthly contracts that will be open for trading. The minimum tick size is 0.25 basis points which is equivalent to 0.0025. That is why all forex quotes are expressed up to 4 places of decimals.

Let us now turn to bid and ask prices of currency trades. Bid price is the best buy price and ask price is the best sell price. For example in case of USD/INR the bank may offer bid at Rs.70 and the ask price at Rs.72. That means the bank is willing to pay your Rs.70/dollar to buy dollars from you but will charge Rs.72/dollar if you want to buy dollars from the bank. The ask price is always greater than the bid price and the difference is called the bid-ask spread. This is the income that the bank earns in its forex operations.

Niraja Mehtaanswered.Like in the case of futures trading in stocks, indices and commodities; currency trading is also based on minimum lot size. The only difference is that the lot size in currency trading is defined in value terms and not on quantity terms. The minimum lot size for a USD/INR pair is $1000, which is the equivalent of Rs.71,000 approximately. Similarly for the Euro Pair it is €1000 and in case of UK pound the lot value is UK£1000.

Let us also look at the tick sizes with respect to currency futures trading and the contract expiry. Currency derivative contracts will expire on the last working day of the month. At any point there will be a total of 12 monthly contracts that will be open for trading. The minimum tick size is 0.25 basis points which is equivalent to 0.0025. That is why all forex quotes are expressed up to 4 places of decimals.

Let us now turn to bid and ask prices of currency trades. Bid price is the best buy price and ask price is the best sell price. For example in case of USD/INR the bank may offer bid at Rs.70 and the ask price at Rs.72. That means the bank is willing to pay your Rs.70/dollar to buy dollars from you but will charge Rs.72/dollar if you want to buy dollars from the bank. The ask price is always greater than the bid price and the difference is called the bid-ask spread. This is the income that the bank earns in its forex operations.