Forex refers to the foreign exchange market, and involves the selling and buying of fiat currencies. This is the largest and most liquid market on a global scale. Forex trading has become a popular practice for investors, due to the financial potential involved. Accumulating wealth and reaching impressive monetary gains is possible through forex trading, and if you have researched the subject for a bit, you may currently be interested in becoming a trader yourself.

Forex trading is a relatively new investment concept in India. More Indian residents have directed their attention towards this market, since discovering the appealing opportunities revolving around these types of transactions. However, due to unreliable brokers promising unrealistic results, together with the regular risks of Forex trades, the Indian government has put certain restrictions on trades.

Forex Trading in India

So, are you legally allowed to trade Forex in India? What approach should you take on the matter? The following information will provide you with the needed clarifications:

Legality of currency trades in India

The ultimate question here is whether forex trading is or isn’t legal in India? Well, a regular online currency exchange approach isn’t allowed by authorities. This means you won’t be able to exchange any currencies you want at any given time. Trading is however permitted, as long as you as you are using as the base currency INR.

Electronic or online overseas trades are subjected to legal charges, but if you avoid indulging in these approaches, and limit your trades to trading processes regulated by authorities, you can go ahead and become a legal Forex trader yourself.

The Reserve Bank of India (RBI) and Securities Exchange Board of India (SEBI) are the central authorities in charge of regulating these types of investments. Always use the Indian Rupee as your base currency, and you will be legally protected. Currency pairs, such as US Dollar and INR, UK Pounds and INR or Euro and INR are the type of Forex trades allowed.

want to trade Forex in India

Forex brokers

While in other countries, Forex trading comes with increased flexibility, in India, each aspect should be carefully thought through. As you will find out when researching the legal implications further, to enter the Forex market, you will need to invest through an authorized broker.

The forex broker you collaborate with should be registered at Securities Exchange Board of India. Without SEBI authorization, the said trading platform functions illegally.

You’ll come across several available options, and the majority of Indian Forex brokers will offer you INR based currency pair options for EUR, USD, GBP, and JPY.

Social trading

Social Forex trading is a Forex trend becoming popular recently around the globe. This approach allows you to copy the trades of other network users and thus increase the likelihood of successful investments. This can be an appealing approach for beginners, who aren’t exactly sure what trading direction to pursue. You are basically benefiting from the knowledge and expertise of investors with a richer background in the market, giving you a leaping advantage.

Despite the attractive nature of copy trading, considering the existing restrictions in India, this particular option is even more challenging to get into than regular trades. There are only a small number of social trading brokers that allow you to partake in copy trades in India. Verify the available platforms, make sure they are authorized, and only then reach a decision.

However, even if you won’t exactly become a copy Forex trader yourself, you can still make the most out of the advice received. Talking to traders from different regions around the world, sharing strategies, looking over portfolios are a few examples of actions that you can benefit from, revolving around social Forex trading.

Your trading must-knows

As long as you acknowledge the restrictions, and choose to become a legal trader, by finding an authorized broker in your country and using solely the currencies you are allowed to, you can proceed with your first investment. To make sure you handle things correctly from the start, and increase your odds of becoming a successful trader, you will however need to learn some basic forex tips:

  • Define your goals and choose a trading style – try to figure out from the start the ideal trading style for your personality. Because the market is open 24 hours a day, you should think about when you’d be more productive. Some traders deal with the risk profile better during the day, while others function better at night.
  • Broker scams – despite the strict Forex trading restrictions existing in India, scams still occur – inexperienced and uninformed trades are usually subjected to them. To avoid putting yourself in that position, and to lose money or even be charged for illegal practices, spend enough time making a comparison between brokers. Request proof of SEBI authorization before choosing one platform or another.
  • Get acquainted with the lingo – there are a few important Forex terms you need to know, such as bid and spread. You have plenty of articles online that teach you everything you need to know about Forex methodology and terminology, so don’t rush into your first trade before you actually gain some fundamental knowledge in this department.
  • Keep up with economic fluctuations – in order to actually make money through Forex trades, you should be up-to-date in regards to global economics. Read news on the topic, research international markets, calculate expectancies, keep a record of currency value fluctuations – all in all, always be prepared.

These are the most important aspects to be aware of, if you currently live in India and are interested to explore the Forex market. While there might be a few challenges involved here, if you follow the right course of action, understand legal implications and limit your trading activities to options available in your country, you can become a trader yourself. While Forex is a global market, challenges exist in India at the time, so being thoroughly informed on the topic before investing will prevent you from facing a potential legal problem.

Disclaimer- If you have any queries related to Forex trading it is advisable to take advice from an independent financial advisor. Trade with caution, these products might not be suitable for everyone so make sure you understand the risks involved!

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  1. Naresh Kumar says:

    Your article is complete package for a newbie who wants to start forex trading, what is the requirements and guidelines we should consider before starting out.

  2. Roy says:

    Hi sir,
    Thank you for your most recent article about forex trading in India.It was really eye opening for me while I was just thinking about making online forex trade with no previous experience.
    Can you please do me one favor that to share the SEBI OR RBI regulated forex broker in India.
    W’d be grateful to you.
    Thanks once again for your valuable article.

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November 2020