Currency swaps entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction.
Market players - The following three broad categories of participants - hedgers, speculators, and arbitrageurs - trade in the derivatives market
Key economic functions of derivatives - Discovery of Future prices, transfer of risks from those who have them to those who have an appetite for risks, Higher Trading Volumes due to Increased Participation, Speculative trades shifted to controlled & regulated environment, Catalyst for new entrepreneurial activity
A tick is the minimum size of price change. The market price will change only in multiples of the tick. Tick values differ for different currency pairs and different underlyings. For e.g. in the case of the USDINR currency futures contract the tick size shall be 0.25 paise or 0.0025 Rupee
The contract amount or market lot is the minimum amount that can be traded. Therefore, the profit/loss associated with change of one tick is: tick x contract amount
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