Authors: Rajulapati Subramanyam, Professor Dr. K. Pushpa Latha
Abstract: The present study focused on analysing currency derivatives with specific reference to selected currency pairs, examining their trading behaviour, open interest dynamics, and market depth. The research aimed to evaluate how different indicators such as volume, price movement, and order book structure influence trading decisions and risk-return characteristics. By analysing market data for a specified expiry period, the study provided insights into the functioning of currency derivatives and the factors affecting their performance. The findings revealed that liquidity and market participation play a significant role in determining the efficiency of currency derivative contracts. Highly traded contracts exhibited stable price behaviour and offered better trading opportunities, while low-liquidity contracts were associated with higher risks and inefficiencies. The analysis of open interest further highlighted its importance in understanding market sentiment, indicating whether positions were being accumulated or liquidated. Additionally, the study emphasized the relevance of order book analysis in identifying short-term trading signals. The study concluded that a comprehensive analytical approach combining multiple indicators is essential for effective decision-making in currency derivatives trading. It also highlighted the need for investors to focus on liquidity, market trends, and risk management while engaging in derivative markets. The research contributes to the existing body of knowledge by providing practical insights and a structured analytical framework for understanding currency derivatives, thereby aiding both academic research and real-world trading applications.
