Well, foreign exchange is the largest decentralized global market where every currency in the world is traded. Currency trading in India is the most fluid market in the world, however, the legal status of forex trading in India is still a large question and the majority do not know the answer.

So, here we give you an insight into forex currency trading in India through our blog. Written by: Antim Amlan. Published on Sep What Is Forex Trading? How is Forex Trading done in India? Table of content: What is Forex? What is Currency Trading? Why do we have Exchange Traded Currency Derivatives? Is Forex Trading In India Legal? Strategies for Forex Trading in India Who is eligible to trade in Currency Futures markets in India?

Frequently Asked Questions What is Forex? How does the Forex Trading function? Further, currency pairs can be branched into the following categories: Major pairs - Highly traded. Strategies for Forex Trading in India Given its liquidity in terms of daily trading volume, losing money is easier than actually making it.

Following are some of the strategies generally employed to the cause - Price Action Strategy - The price action strategy is the most commonly employed strategy for Forex trading.

Who is eligible to trade in Currency Futures markets in India? Cross Currency Exchange As mentioned earlier, the Securities and Exchange Board of India SEBI has launched cross-currency futures.

Indian Forex Market The foreign exchange market came into existence in India by as late as when the banks were granted permission to undertake trading in currencies by the RBI.

Time Zones Following chart can be referred to understand the time-zone division of the Foreign Exchange Market abbreviated as a Forex market: Forex Trading centers in the world Trading hours in local time Forex Oceania-Asia session Wellington, New Zealand Sydney, Australia Tokyo, Japan Hong Kong, China Shanghai, China Singapore, Singapore India Moscow, Russia Forex Europe session Frankfurt, Germany Zurich, Switzerland Paris, France London, United Kingdom Johannesburg, South Africa Forex Americas session New York, United States Toronto, Canada Chicago, United States Even though a hour market offers a substantial advantage for many individual and institutional traders, it is not deprived of certain pitfalls.

Frequently Asked Questions: Is Forex trading profitable in India? Where can I trade forex in India? You can legally trade forex within Indian Exchanges like BSE, NSE, MCX-SX.

Is Forex trading just gambling? Which currency pairs can be traded in India? As mentioned earlier, only the following currency pairs can be traded in India - Rupee-dollar Rupee-pound Rupee-yen Rupee-euro Euro-dollar Pound-dollar Yen-dollar What if I want to trade the FX markets with international brokers?

Trading the FX markets with international brokers is illegal. What is punishment for forex trading in India? The 11 Fundamental Duties of Indian Citizens As per the Constitution of India, there are 11 Fundamental Duties of Indian Citizens which are non-enforceable in the court of law.

Prachi Darji. What is a Writ Petition? How do you file one in Court? Writ Petition is an order given by the High Court to a lower court directing them to act or stop acting in a certain way. The article talks about Writ Petition, the types of writ petition, how to file a writ petition in court and the format of each writ.

Prostitution in India Prostitution in India is legal under the Immoral Traffic Act but its related activities such as owning a brothel, child prostitution, etc have made it illegal. Is Weed or Marijuana Legal in India? Weed, marijuana, bhang, charas, ganja and so on, cannabis in India has been given numerous names and forms.

Legal Services. Property Possession Delay - RERA Possession Delay - NCLT Trademark Registration Legal Notice Wrongful Termination - Legal Notice Canada Immigration PR Consumer Case Posh. Apostille Certificate Mutual Consent Divorce Cheque Bounce Complaint Unpaid Salary - Legal Notice Consumer Matter - Legal Notice Legal Documentation Suit - Recovery of Money. Goverment Registrations. Marriage Certificate Name Change Medical Negligence GST Registration Legal Heir Certificate.

Court Marriage Apostille Certificate Company Incorporation FSSAI License. Book Consultation. Property Law Recovery of Money General Legal Corporate and Individual Taxation. Divorce Startup Criminal Licenses. Family IPR Consumer Protection Immigration Services. Employment Corporate Civil Marriage. You can also add orders to your trade. These orders include limit orders and stop orders, which help you to minimize risks and lock in profits whenever your loss or profit targets have been met.

You do not have to add orders to your trade, but experts highly recommend that you do in order to minimize your risks and protect your profits from market volatility. Stop loss orders enable you to exit a trade automatically if the price worsens and thus minimize your loss.

Limit orders enable you to exit trades automatically if the price gets better and thus lock in your profits. To close your trade, you have to perform an action that is opposite to the action you performed while opening the trade. For example, if you opened a trade by purchasing three CFDs, you have to sell three CFDs to close it. When you close your trade, your profit and loss will immediately reflect in your balance.

To get started with Forex trading, you must sign up with an online Forex broker. If you are a beginner to Forex trading in India, you will find it very difficult to identify a reputed online Forex broker on your own. This is where we can help you. We have invested a great deal of time and energy in identifying, reviewing, and rating the best online Forex brokers in the industry. We suggest you go through our reviews and choose one of the online Forex brokers in our list to get started.

Once you have chosen your Forex broker, get started with a demo account. A demo account serves as a teaching tool for beginners to trading. You can use it to understand trading better. And once you gain the confidence you require to trade for real, you can open a live account.

Now is the time to deposit a small amount of money into your account. Avoid spending a huge amount of money to begin with. Instead, spend more time in getting educated at the online Forex broker. All the brokers we recommend to Indian traders offer free educational material in the form of video tutorials, one-to-one training, high-quality articles, free eBooks, webinars, and others. Use these free resources to gain a deeper and better understanding of Forex trading.

In this course, I will show you how you can take advantage of currency movements to make profits. I will thoroughly explain how Forex Brokers work so that you are able to easily separate Honest Brokers from the weak ones when you are ready to open a Real Trading account. I even include a FREE guide to selecting a Forex broker, based on my own experience of Real trading. In this course, you will also learn how to read the Calendar of Economic events, which is imperative for Fundamental trading on Forex as well as other Financial marketplaces such as NYSE, London Stock Exchange, Futures Exchanges, and more.

Forex FX , also known as foreign exchange or currency trading is a global market, decentralized in nature, where all the currencies of different economies are traded- sold and bought. The forex market is the largest and also, the most liquid market in the world. Simply put, forex trading is the act of buying and selling currencies and if you've ever traveled overseas, you've made a forex transaction.

For example, on your trip to France, you converted your rupees INC into euros and when you did this, the forex exchange rate between the two currencies, based upon the supply and demand at that point in time, determined the number of euros you get for your rupees. Also, the exchange rate is highly liquid and fluctuates continuously, understanding which requires lucrative skills and broad insights into the market-based trading system.

Just like stocks, you can buy or sell a currency based on what you think its value is or by simply strategizing where its value is headed.

It is legally allowed to trade Forex within Indian Exchanges like BSE, NSE, MCX-SX. However, you can hit big or lose it all just as easily. If you think a currency will increase or decrease in value, you can buy or sell it accordingly. With a market of this high flexibility, finding a buyer when you're selling and vice versa is much easier compared to any other market space. Forex trading occurs when the buying-selling of one currency for another takes place as a part of the same transaction and categorically at the same time.

The two currencies involved in the transaction form a currency pair , where a representation of each one is executed by three letters - the first two letters representing the name of the country, and the third letter representing the name of the currency, for example, Indian Rupees: INR, United States Dollar: USD, Eastern Caribbean Dollar: ECD, Australian Dollar: AUD, Japanese Yen: JPY, etc.

As mentioned earlier, the foreign exchange market is decentralized, highly liquid, and global and the participants in the foreign exchange market include central banks, commercial banks, brokers, etc.

The foreign exchange departments of the major banks are linked on a hour schedule on a global basis. The major commercial centers of the foreign exchange are in London, Amsterdam, Frankfurt, Milan, Paris, New York, Toronto, Bahrain, Tokyo, Hong Kong, and Singapore. The central banks RBI for India monitor the market movements and are obligated to intervene, if required, according to the government policies.

Currency trading, often referred to as foreign exchange or Forex, is the purchasing and selling of currencies done purely with the objective of making profits. For Example, Suppose you want to take advantage of the growing price of a dollar. The dollar is trading at Rs 64, you feel that price is going to appreciate and is expected to reach at Rs 67 in a few months you can enter into a long position by buying USDINR contract on the exchange. If the price goes to Rs 67, you get a profit of Rs.

An Exchange-Traded Derivative is a financial contract which is listed and traded on a regulated exchange. Simply put, these are the types of derivatives that are traded in a regulated manner. Exchange-traded Currency Derivative derives its value from an underlying asset that is listed on a trading exchange. It is also guaranteed against any default through a clearinghouse making it a safer medium. Due to its presence on a trading exchange, ETDs differ from over-the-counter OTC derivatives in terms of its highly standardized nature, higher liquidity, and ability to be traded in the secondary market.

Note should be taken of the fact that ETDs include futures contracts and also, options contracts, that is, one can use a currency future contract in the form of Exchange Traded Currency Derivative ETDs to exchange one currency for another at a future date at a price decided on the date of the purchase of the contract.

In India, such derivative contracts are used to hedge against currencies of higher value like dollar, euro, pound, and yen. Mostly used by corporations with significant exposure to imports or exports, these contracts hedge against their exposure to a certain currency. It is a settled fact that no Indian citizen, as guided by SEBI and regulated by RBI in order to minimize risk incumbent in it, can undertake forex trading inside the Indian Territory through any electronic or online forex trading platform under any circumstances.

By virtue of RBIs circular issued in , forex trading through electronic or internet trading portals has been prohibited. However, forex trading is held legal when one does it through specified foreign exchange trading platforms and the base currency is INR Indian Rupees. Simply put, the Indian Government has limited trading for Indian residents to only trade currency pairs which are bench-marked against INR Indian Rupee.

As an Indian resident, as long as you are trading through any specified Indian Brokerage allowing access to Exchanges based in India such as the NSE, BSE, MCX-SX and also provides access to currency derivatives, the transactions made for the trade is held entirely legal. Earlier, the only tradable instruments were EURINR, GBPINR, JPYINR, and USDINR.

However, the Reserve Bank of India further, from 10th December onwards, allowed exchanges to offer cross-currency futures contracts and exchange-traded currency options in three more currency pairs namely, EUR-USD, GBP-USD, and USD-JPY. At this juncture, it should be duly noted that under the Foreign Exchange Management Act FEMA , or FEMA Act, one can face imprisonment or be imposed with a fine for forex trading done illegally in India. However, a note can be taken of the fact that there is no prohibition for NRIs to do foreign exchange trading in India.

According to Investopedia, the brokers are those firms that provide traders with access to a global forum allowing them to buy and sell foreign currencies. Transactions happening in this market are always between a pair of two different currencies which implies that forex traders either buy or sell the particular pair they want to trade.

A retail forex broker or currency trading brokers are professional terms synonymous with Forex Traders. However, maximum forex broker firms indulge themselves in only a very small portion of the volume of the overall foreign exchange market whereas retail currency traders use these brokers to margin access to the hour currency market for purposes of speculative predictions.

Larger firms such as investment banks also provide Forex broker services for institutional clients. Unlike shares or commodities, forex trading does not take place as exchanges but between two parties in a direct manner, categorically, in an over-the-counter OTC market.

The said OTC market is divided into three different types viz, spot, forward and futures forex markets. Forex trading involves selling one currency in order to buy another, which is why it is quoted in pairs. Each currency in the pair is listed as a three-letter code - formed of two letters that stand for the region and one that stands for the currency itself.

Major pairs - Highly traded. Minor pairs - Less frequently traded. There are plenty of ways in which a person can trade forex by simultaneously buying one currency while selling another in the same transaction. Traditionally and for a long time now, forex trade transactions have usually been made through a forex broker. But with the rising popularity of online trading one can easily employ the advantages of forex price movements using derivatives like CFD leveraged products, which enables a trader both, individual or institutional, to open a position for merely a fraction of the full value of the trade trading.

Although the leveraged products can boost the profits, they can also magnify losses if the market moves against you which is why CFD trading is illegal in India. Given its liquidity in terms of daily trading volume, losing money is easier than actually making it.

Following are some of the strategies generally employed to the cause -. Price Action Strategy - The price action strategy is the most commonly employed strategy for Forex trading. It completely depends on the bulls or bears of the price action in currency trading and is typically useful in all kinds of market conditions.

Trend Trading - In this type of strategy, the traders need to identify the movement whether upward or downward of the currency price on the basis of which they need to decide on their entry point. Online tools such as moving average, stochastic, relative strength indicators, etc, are also available to aid the traders for the analysis. Counter Trend Trading - In this strategy, a trade is made against the current trend with pure hopes of making small gains and is dependent on the prediction that the trend will reverse.

Range Trading - In a range trading strategy, the trade is made in a specific range of currency prices and are needed to identify the favorable price conditions in which they can trade where the price levels are usually dependent on the demand and supply for the currencies. Breakout Trading - In this type of trading, a trader enters into the market at that point when the market is emerging out of a previous trading range, i.

e, a breakout. Position Trading - Position trading is used by the seasoned veteran traders mostly and involves analyzing the charts at the end of the day.

One needs to have a strong grasp over the fundamentals of the market to master this strategy. Carry Trade - The focus in the carry trade strategy is on the interest rate differential of the two countries whose currency is being traded.

This involves selling out that currency which has a low-interest rate and buying the one which has a higher interest rate and hence is considered a rather successful strategy if executed properly. Any Indian, residing in the territory of the nation, or a company including banks and other financial institutions can participate in the futures market. However, Foreign Institutional Investors FIIs and Non-Resident Indians NRIs are prohibited from participating in the currency futures market.

As mentioned earlier, the Securities and Exchange Board of India SEBI has launched cross-currency futures. The options have now opened up in euro-dollar, pound-dollar, and dollar-yen EUR-USD, GBP-USD, and USD-JPY. The foreign exchange market came into existence in India by as late as when the banks were granted permission to undertake trading in currencies by the RBI.

Indian foreign exchange market as it exists today is well structured and conducted in a regulated-fashion by the RBI. The dealers authorized by the RBI can engage in such transactions. The forward market is active for a maximum period of six months in the Indian territory. In recent years, the maturity profile of the forward market has elongated, the credit of which goes mainly to the RBI initiatives.

The link between the forward premia and interest rate differential appears to work largely through the leads and lags and it can be observed that the forward markets are also influenced by importers and exporters through a grant of credit to overseas parties.

Following chart can be referred to understand the time-zone division of the Foreign Exchange Market abbreviated as a Forex market:. Even though a hour market offers a substantial advantage for many individual and institutional traders, it is not deprived of certain pitfalls. Discussing one of which is that to monitor a position for such long periods of time is highly painstaking and near impossible for any trader which implies that there will certainly be trading times when opportunities are missed.

What can be even worse is the situation when a jump in market volatility leads the spot to move against a set position. For reducing such a risk, a trader has to be vigilant and categorically aware of when the market is most volatile, and decide what times are best for his trading pattern accordingly.

One of the greatest characteristics, or rather advantage, of the foreign exchange market, is that it opens for 24 hours a day enabling the investors to trade during as well as after normal business hours or also after work. One can even do the deed by night! However, not all time-zones can be treated equally as there are times when price action is consistently volatile, and also when it is completely muted.

It can be concluded as a major observation that major trading sessions in Forex are directly interconnected with market hours. Being a market with high liquidity, the chances to earn a profit is as slim as suffering a loss not only in India but anywhere in the whole wide world. With the right skill set and command over the fundamentals, one needs to learn all the tricks of this trade. Gambling is where you essentially and categorically depend on pure luck!

Going by this standard, Forex trading cannot be considered gambling. It is a high risk-based process, where a trader tries to earn a profit by predicting the movement of the market. As mentioned earlier, only the following currency pairs can be traded in India -. Section 13 of the FEMA states that the punishments in the contravention of the Act can result in the penalties as well as imprisonment under the Act. General Legal. What Is Forex Trading and how to trade forex in India?

Seeking answers to what is currency trading in India? Or confused about how to carry forex trading legally in India? Well, foreign exchange is the largest decentralized global market where every currency in the world is traded. Currency trading in India is the most fluid market in the world, however, the legal status of forex trading in India is still a large question and the majority do not know the answer.

So, here we give you an insight into forex currency trading in India through our blog.

Frequently Asked Questions: Is Forex trading profitable in India? As mentioned, foreign exchange trading is highly regulated and monitored for a number of critical economic reasons. All you need is an open mind and a passion for being successful! Once you have chosen your Forex broker, get started with a demo account. Why do we have Exchange Traded Currency Derivatives? The forex market or currency market remains open round the clock, 24 hours a day all around the world, including India. Besides having a famous youtube channel, he also owns a website that allows traders to signup for paid mentoring sessions.

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