Almost everyone in India is familiar with the concept of stocks and equity trading. Nevertheless, there is also another high-potential market that is not widely known in the Indian subcontinent but has a great deal of potential, which is ‘Forex trading’. While some financial experts have taken advantage of it already, the majority are still confused by the legalities of forex trading in India. If you’re one of them wondering about forex trading in India or concerned about trading currencies legally in India, this article can help!
What is Forex Trading?
Forex trading involves the practice of buying one currency and selling another in the hopes of making a profit. Essentially, it is very similar to the currency exchange you would do while travelling abroad, with the exchange rate constantly fluctuating based on the supply and demand of that country’s currency. Usually, all of this buying and selling takes place on the global foreign exchange market, which is a decentralized market.
Simply put, forex trading involves speculating on currency prices with the aim of generating profits. As forex trading primarily involves exchanging one currency for another, all forex currencies are traded in pairs. A currency pair is a quotation between two currencies; known as a quote currency and a base currency. In order to determine the exchange rate for a currency pair, a variety of fundamental, as well as technical factors must be taken into account. Economic policies, political stability, trade flows, and supply and demand changes all contribute to these factors.
What is the Forex Market? Forex, or foreign exchange, is the world's most traded financial market. Investors, financial institutions, and banks speculate on currencies on the forex market. A daily trading volume of $6.6 trillion makes it the largest and most liquid financial market in the world. Trading in the forex market is conducted over the counter (OTC), which enables it to be a decentralized market.
The Beginner’s Guide to Forex Market is a great resource that will provide you with all the details you need about trading currency on the forex market.
Is Online Forex Trading Legal in India?
According to the FEMA, currency and forex trading in India is technically legal. Yet, if traders fail to adhere to the authorized brokers or the permitted pairs of currencies, they may be in violation of the law.
SEBI and RBI regulate forex trading in India to minimize the risks associated with it. Due to this, Indian citizens cannot trade forex online or electronically within Indian territory under any circumstances. However, forex trading in India is considered legal when it is carried out through certain foreign exchange trading platforms that are designated as legal.
There were only four tradable instruments earlier the EUR/INR, the GBP/INR, the JPY/INR, and the USD/INR that were able to be traded. However, as of December 10, 2015, there has been approval from the Reserve Bank of India to allow exchanges to offer cross-currency futures contracts as well as exchange-traded currency options in three more major currency pairs: EUR-USD, GBP-USD, and USD-JPY.
What is the FEMA act? In 1999, the Central Government of India enacted the Foreign Exchange Management Act (FEMA), which is a law that governs the management of foreign exchange in the country. The Reserve Bank of India regulates forex trading in India through the Foreign Exchange Market Act (FEMA).
How to Choose the Best Forex Broker in India?
Whenever you’re looking for a Forex brokerage company, keep in mind that you’re giving access to every penny you’ve earned, with the hope that they’ll allow you to trade and withdraw your profits. Even if you have great strategies for forex trading in India, if the broker shuts down or disappears with all of your money, it will all be for nothing. For this reason, it’s important to choose a reliable forex broker who meets your needs and won’t scam you.
Consider the following tips when choosing the best broker for forex trading in India.
- Regulatory Compliance – Flashy websites do not necessarily indicate that a broker is trustworthy. Verify the broker’s regulation by checking the broker’s website thoroughly or by reading reviews.
- Deposit & Withdrawals – Pay close attention to the flexibility of your withdrawal and deposit options when choosing a forex broker. Ensure that both deposit and withdrawal options are smooth and reliable.
- Availability of diverse Account Types – A good forex broker should offer a range of trading account types for traders of various experience levels and capitals. Make sure you carefully review the list of accounts your broker offers, and decide if any are appropriate for your experience and capital.
- Features & Offerings – Each Forex brokerage has its own offerings and features. The four main features to compare among forex brokers are high leverage, reasonable commissions, low spreads and forex bonus offers.
The AximTrade Review is a great resource for those who would like to learn about the benefits of trading forex with a trusted broker.
How to trade forex online in India?
To start forex trading in India digitally, a person will require to open a forex account. An explanation of how to open an online forex trading account from India is given below in the following paragraphs.
Follow these steps to open a forex account with AximTrade:
- Log in to your AximTrade account and choose “+ Open an Extra Account” in the top right corner of the page.
- Select the “Account Type” that suits you best. There are four types of accounts to choose from Standard, Cent, ECN, and infinite leverage. A demo account is also available if you’re just starting out.
- Select your preferred account type and press “Open”.
- Create a trading password and an investor password for your account. It is not advisable to use the same password for the investor account and the trading account. Be sure to use both uppercase and lowercase letters, along with numbers. Click “Done”.
- The account has now been set up for trading. All your accounts can be found under the “My Accounts” tab.
Forex trading in India or in general may seem like an excellent opportunity for profit-making to someone unfamiliar with the market. However, learning the ropes of forex can be challenging, and most beginners lose money as they learn. Here are the top 10 things to know before opening a Forex account for the best trading results.
Best Time for Forex Trading in India
The trading sessions for forex trading in India follow India’s Standard Time (IST), which means the market opens on Monday morning and closes on Saturday morning. There is a time difference between European forex brokers’ market hours and Indian forex brokers’ market hours because India’s Standard Time is 5 hours 30 minutes ahead of Greenwich Mean Time (GMT+5.5).
When it comes to forex trading in India, the overlaps are the busiest sessions of the day, as the market is extremely active during these times. Volatility and liquidity make trading during these times of day particularly profitable. Every time a currency pair is traded, its activity varies, depending on who is trading it. Identifying the time when forex pairs are most active requires understanding the different forex trading sessions.
Market timings for MetaTrader traders in India start on Monday at 2:30 a.m. IST and continue until Saturday at 1:30 a.m. or 2:30 a.m. If you are looking for the best type of forex trading in India, we recommend using AximTrade, which is available 24 hours a day except on weekends. In contrast, the Indian Exchange market (nseindia.com) allows you to trade only between 9:15 and 15:30 IST.
Benefits of choosing AximTrade for Forex Trading in India
As a global leading Forex trading brokerage firm, AximTrade offers its customers the highest leverage on the market, extending up to infinity. Traders can also take advantage of easy-to-use technology, educational resources, technical analysis, and highly competitive trading options such as Copytrade to explore the diversity of forex currency pairs.
AximTrade offers up to 15 trading accounts, including 7 Standard Accounts, 2 Cent Accounts, 5 ECN Accounts and 1 Infinite Leverage Account per Active Member Area. AximTrade stands out for its reliability and excellent trading conditions, with an execution time of 0.004 s, 100+ trading instruments, and a 100% forex bonus. With a minimum deposit requirement of just $1 and a wide range of trading tools provided by the leading broker, forex trading in India is now easier than ever with AximTrade.
AximTrade partnership program offers the simplest start-up options. Our Forex IB program is the simplest and most straightforward type of partnership. Signing up is easy, you don’t have to pay any upfront investment, and there is no integration needed. Contact us for details on how to become a forex broker partner from India and start earning commissions right away when your clients execute a trade by using AximTrade.
Online Forex Trading in India – FAQs
Which Currency pairs are allowed for Forex trading in India?
As an Indian forex trader, you will be able to trade currency pairs that contain the Indian Rupee as a base currency (INR). Furthermore, forex trading in India is also possible using other cross currency pairs, which include USD/JPY, GBP/USD, and EUR/USD in addition to USD/JPY.
How Forex trading in India works?
You need to open a currency trading account before you can make your first forex trade. This requires you to comply with the broker’s KYC requirements. In order to open a forex trade, you need to deposit a margin amount, which is the amount the broker holds while your trade is open. Upon receiving the access credentials for your trading account from your broker, you can begin trading.
Trading here is done between 9 a.m. and 5 p.m., with no physical deliveries and no settlements made in cash. The entire process will be digital!
Is Forex trading profitable in India?
Due to the high level of liquidity in this market, the chances of making a profit or suffering a loss are very slim, and it is like throwing a coin to see which way it comes, not only in India but all over the world. However, one needs to make sure they acquire the right skill set and are well versed in the fundamentals before they learn all of the tricks of this trade. A good online Forex course can be very helpful for gaining a deeper understanding of the underlying principles.
Which currency pairs can be traded in India?
Forex trading in India can be done only with currency pairs listed below.
Discover the best currency pairs to trade in 2022 to get the most out of your trading.
Best MT4 broker for Forex Trading in India?
AximTrade is a fast-growing brokerage service provider in the global markets with a highly advanced MT4 execution and CopyTrade platform in India. In addition to supporting trading forex currencies, MetaTrader 4 also allows you to trade commodities, cryptocurrencies, indices, and stocks as well. You can also customize the platform to meet your trading needs. Moreover, AximTrade advanced charting facilitates simultaneous trading and analysis of the technical aspects of the market.
Which forex broker offers low spreads in India?
With AximTrade, you can trade all majors with low spreads between zero and one pip. AximTrade also offers real-time forex market pricing and quoted buy and sell prices for a number of instruments on our online platform. You are free to make your own decisions about when and how you want to buy or sell, and execute your transactions at any time.
Is there still something you are curious about and would like to learn more about currency trading? You can find expert-driven answers to some of the most frequently asked questions about forex trading here.