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. 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. Learn how to buy shares in India. India has dealt with confirmed COVID cases better than originally predicted , a report by the State Bank of India SBI Ecowrap found.

Another SBI report referencing the economy stated that it began accelerating in September. The report added that the state-wide number and economic performance does vary across states like Karnataka, Maharashtra, Kerala, Andhra, Delhi, West Bengal, Chhattisgarh, and Tamil nadu which are not doing so well in terms of managing COVID It goes on to state that Bihar, Attar Pradesh, and Jharkhand, along with some others, have managed the situation well with model cases estimated to be higher than actual cases.

Currently, the central bankers in India are being challenged with how to maintain monetary policy independence while allowing a steady stream of foreign capital and holding a stable currency. The recent inflation spike in India resulted in the RBI holding back from lowering interest rates, despite the economic forecast predicting a shrinking economy.

The RBI has essentially let the rupee appreciate to appease investors on the hunt for riskier assets, adding a headwind for its declining export sector. At the same time, with the U. elections now behind us, a Biden presidency will likely create a more predictable trade backdrop , which is positive for businesses with corporate profitability and international supply chains.

As we just noted, forex trading is legal in India, but you can only trade currency pairs that include the Indian Rupee. A key reason behind this limitation is because the Indian Rupee is weak against the USD.

If traders in India want to buy the USD they must do so from the Central Bank of India. Traders based in India can trade forex on the National Stock Exchange NSE , the Metropolitan Stock Exchange MSE , or the Bombay Stock Exchange BSE. In , the Securities and Exchange Board of India SEBI was established to monitor and regulate the forex market in India. SEBI is the concerned authority in India that protects forex traders, securities issuers, and forex-regulated agencies.

Forex brokers offering their services to India residents, therefore, must be regulated by SEBI. Take a look at the top forex brokers for beginners. Forex trading should only be attempted after educating yourself about forex. Once you have a strong idea of the key terms and strategies, there are just two more steps to follow to get started forex trading in India. We have outlined these steps below:. When forex trading, you can choose to use a laptop, tablet, mobile phone, or your standard desktop.

If you like to trade on the go, choosing a broker with a quality forex trading app will be important. With the price of currency pairs frequently changing, having a device or two that will allow you to place trades quickly will be crucial to the success of your forex trading. There are several online forex brokers available to forex traders based in India, offering a variety of tools, services and fees.

The broker you choose should benefit your trading style, trading level, budget, and trading needs, such as a good selection of educational material to help expand your forex trading knowledge. Most importantly, make sure the broker you choose allows clients to trade Indian Rupee. Furthermore, make sure to determine who the broker is regulated by; brokers offering services to traders in India should be regulated by the Reserve bank of India RBI , the regulatory authority over forex brokers in India.

To become a successful forex trader, you will need to have some forex trading strategies under your belt. The amount of strategies out there can become overwhelming though, so we suggest starting by familiarizing yourself with the most successful forex trading strategies first and foremost to help you stay focused. Scaping is a strategy used by some forex traders to make a lot of smaller trades over and over.

You can set the entry and exit positions with smaller movements in the currencies to ensure low margins. To be good at scalping, traders need to make precise executions.

These trades are short-term, lasting anywhere from around one minute to one hour. Staying on top of currency trends will be crucial to the successful implementation of scalping. The process of day trading is in the name: it involves traders opening and closing a trade within the same day. These trades can last from a couple of minutes to a few hours.

This ensures that traders are less likely to be hit with unprecedented losses as a result of overnight volatility. Day trading is a good way to limit risk and increase your odds of profitability. Swing trading is another popular strategy that investors turn to and it involves trading forex currencies throughout the day or week. With this strategy, traders have enough time to deflect the frequent ups and downs of currency pairs.

You can jump past the unnecessary stop losses on your path to success with this medium-term forex trading strategy. Position trading is another key forex trading strategy in India where traders hold positions open long-term. With this strategy, trades can last from about a week to a few months, or even several years.

Traders can benefit from larger movements in the price of currency pairs without the need to focus on smaller market changes. Additionally, entry and exit positions can be set for longer periods with position trading. Overall, this trading strategy involves keeping on top of socio-economic policies, and current events that have a global impact.

Signing into your account casually once or twice a week is enough for position trading. And now for ranging trading — the last in our list of key trading strategies in India.

This strategy involves analyzing the historical data of currency pairs to identify trends in the market. Based on the financial data, you can set a wider entry and exit position to capitalize on previous price trends.

With the calculated risks involved, it is a safer alternative to day trading. At this stage you are probably wondering what exactly forex trading in India looks like, right? If you think the value of USD will rise within the next couple of hours, you could buy , units of USD.

In this instance, you will need to deposit 7,, INR into your account to make the trade. Within 2 hours, the USD rises in value to In July , Prime Minister Narenda Modi launched GST. Since then, the government of India has mandated the payment of a fixed tax when traders partake in one or more of the following:.

In , corporates and investors were given more flexibility to hedge offshore currency exposures following the decision by the Reserve Bank of India to incorporate three more cross currencies into the exchange traded derivatives market including futures options. These currency pairs can be traded in the Indian currency market under the National Stock Exchange, but traders can trade almost all currency pairs using a forex broker. Yes, you can trade forex in India through a regulated, local forex broker.

However, international retail forex trading in India is not permitted. Our research suggests the best forex broker for trading in India is Pepperstone. Pepperstone is a forex broker based in Australia, with competitive features everywhere you look. By Tim Fries. Tim Fries. Reviewed by Shane Neagle. Shane Neagle. Top Forex Trading Platforms in India.

Based on our extensive research, here are our findings: FOREX. com Best Overall Pepperstone Best Discount Service Avatrade Best for Forex Innovation OctaFX Best for Fixed Spread Accounts.

The Forex. com online platform is designed to provide its users with safe and low-cost forex trading. Pros Range of assets including most currency pairs, cryptocurrency, CFDs, and stocks Competitive with spreads and volume Award-winning broker for education, mobile trading, and low costs.

Cons Slow customer service Pushes you towards agency execution and higher cost services. Visit FOREX. com on FOREX. Pepperstone offers low trading fees and an easy account opening process. Pros Quick and simple account opening process Low trading fees Low forex and equity index fees No deposit fee Quality customer service. Cons No investor protection for non-EU clients No banking license.

AvaTrade is best for CFDs traders looking for low spreads. Pros Trade CFDs on all classes Low trading fees Multiple and free deposit and withdrawal options Quality educational tools Quick and simple account opening process. Cons Limited research tools Inactivity fee Poor phone support. Pros Fixed spread accounts Commission-free accounts Copy-trading App Negative balance protection. Cons Limited trading instruments Lack of regulation. Since , the number of currency pairs accessible by Indian residents has grown.

For decades, India has had an intriguing and complex relationship with foreign exchange and capital controls. Ever since World War II, India struggled to maintain sufficient foreign exchange reserves. To correct the deficiency of foreign currency reserves, India adopted several draconian capital control measures to limit how Indian residents may spend their money overseas. Despite numerous reforms and liberalization efforts, the remnants of these strict policies have seeped into the lives of everyday traders and investors.

Although the United States has removed India from its internal list of developing nations. Foreign exchange reserves are also essential to facilitate cross-border trade. The problem with this is India is a net importer, meaning the country imports more than it exports.

If too much foreign capital flows into the country unchecked, it can lead to inflation. India has been tackling high inflation rates for years. Because of this complicated blend of circumstances, India has adopted a rigorous approach to regulating foreign exchange trading. As mentioned, foreign exchange trading is highly regulated and monitored for a number of critical economic reasons. Forex is regulated by the Reserve Bank of India RBI under the Foreign Exchange Management Act, FEMA is an Act of the Parliament of India.

Before the FEMA, there were a series of far more strict predecessors to this act. Foreign exchange controls were first adopted in , while India was under British rule. As WWII broke out, the Defense of India Act was introduced, which essentially declared martial law.

The Act gave the Central Government power of controlling the use or disposal of, or dealings. in, coin, bullion, securities or foreign exchange , among many other things. In , following the conclusion of WW2, India introduced the Foreign Exchange Regulation Act FERA of The act was initially intended to be temporary. Ten years later, the act became a permanent part of the law.

Later, FERA, can into effect, bringing with it even harsher constraints. Despite decades of liberalization of forex regulations in India, the country remains one of the most inhospitable places in the world to trade forex and transact in foreign currencies. Forex trading in India is legal but under very restrictive conditions. The RBI may authorize certain people and companies to carry out, deal in or transfer any foreign exchange or foreign security.

Regulated exchanges offering forex derivatives are the National Stock Exchange of India, Bombay Stock Exchange and two others. In India, you can legally trade the following currency pairs as futures or options contracts:. These products are often considered less competitive than what international brokers offer, such as spot-forex and CFDs. Moreover, global forex and CFD brokers provide dozens of forex trading pairs and hundreds of more instruments on their trading platforms.

Many international forex brokers, mainly offshore regulated companies, are willing to open accounts for Indian residents and nationals. Once you have the trading account open, you might face challenges remitting money overseas to the account of a forex broker. According to international anti-money laundering AML rules, brokers can only allow clients to fund their account from their own accounts.

Consider any potential obstacles or risks of repatriating your profits back to India. Author: Mark Prosz. A portion of the Sign up links to brokers websites are affiliate links. We may receive a commission with no charge to you. This enables us to keep creating helpful forex trading content for our readers for free. Forex Trading in India For decades, India has had an intriguing and complex relationship with foreign exchange and capital controls.

Top Forex Brokers in India. India Accepted. Exporting is an excellent mechanism for acquiring foreign currencies. Therefore, India requires more foreign currency than it collects.

Forex trading regulations in India As mentioned, foreign exchange trading is highly regulated and monitored for a number of critical economic reasons. The Act gave the Central Government power of controlling the use or disposal of, or dealings in, coin, bullion, securities or foreign exchange , among many other things.

Is forex trading legal in India Forex trading in India is legal but under very restrictive conditions. Forex brokers in India As mentioned, it is possible to trade forex futures and options in India. About This Article. Previous Post Best Offshore Forex Broker Next Post Best Stock Market Youtube Channels. LMFX Review Forex Trading Regulations. Account Base Curreny. Account Base Currency.

Tickmill India Review Regulated by CySEC, FCA, FSCA, FSA Trading accounts: Classic, Pro, VIP Leverage: Up to Platforms: MT4, MT5, Mobile, Web. The movement of the currency pair futures is known to be in and around the spot rate. Stop loss orders enable you to exit a trade automatically if the price worsens and thus minimize your loss. And having opened an account, you can go ahead, and trade currency pairs permitted by the RBI. The said OTC market is divided into three different types viz, spot, forward and futures forex markets.

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