Forex trading in India has drastically developed since the early ages, and more people are taking up currency trading to build a secondary income stream. However, considered to other countries, India is highly regulated and has strict rules and conditions regarding forex.
In this article, we will explain
- the legal limitations you should know
- Finding a compliant broker
- Best strategies you can use
- Getting started with a demo account
Restrictions and Legality
As mentioned earlier, more laws are regulating forex trading activities in India than in most other countries. While forex is not illegal in India, you could easily commit a crime if you don’t know what you’re doing.
The three core rules to remember are:
- a trader is allowed to trade any pairs with the Indian Rupees as a base or quote currency. However, you’re only allowed to trade three cross-currency pairs — USD/JPY, GBP/USD, and EUR/USD.
- CFD trading is strictly prohibited in India
- Only exchange-regulated brokers are allowed.
Any violation of these regulations would result in hefty sentencing and excessive monetary fines.
Finding an Online Forex Broker
Once again, only trade with SEBI-regulated brokers. Trading through someone unregulated is a nonbailable crime in India, so whatever promises you’re offered are not worth the risk and consequences.
We recommend you start with the SEBI (Securities and Exchange Board of India) website or simply search for a list of SEBI-regulated institutions. From there, check out their website, tools, available resources, and third-party reviews. Nowadays, you want to work with a modern broker who can provide a seamless experience for you across devices while supporting you with accessible customer services around the clock.
Best Forex Trading Strategies in India
You should never start trading without establishing a strategy first. Below are three of the most popular strategies used by new and veteran traders in India.
Day Trading
Day trading is one of the most used forex trading strategies in India. It requires a trader to conclude all trades by the end of the day. This way, traders are protected from unexpected drastic changes over the weekend or overnight volatility. Most trades are between a few minutes to a few hours, and most traders conduct multiple transactions within a day.
Position Action
Position action is designed for medium-to-long-term positioning. If day trading sounds too aggressive for you, or if you want to treat currency like a long-term investment, position action would be suitable for you. Basically, you set entry and exit positions for longer positions, from a few weeks, months, up to a few years. In position action, staying informed on current events and policies that may affect a currency’s value is vital.
Scalping
Or, perhaps you want to go as aggressively as you can. Then, consider learning the scalping strategy. The idea is simple. By setting entry and exiting points with minor changes, you will scalp off these small profits over and over again. What you lose in value, you make up with volume. Therefore, these trades usually last anywhere from one to six minutes.
Getting Started
To start with forex trading in India, learn the basic market rules and strategies first. Then, find a SEBI-regulated broker and open a trial or demo account so you can test your knowledge without the risk of actual monetary loss. Make sure your connection is fast and steady, as the most significant piece in forex trading is making decisions at the right time.
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