Forex Trading In India

Forex Trading In India and Whether It Is Legal To Do So!!

Fintech Investment

Last Updated on 10/06/2021 by Pardeep Garg

It is quite probable that you have already noticed a few advertisements promoting something called an “online trading of forex”, on your social media wall or in the ad bar of some blogging website. Some of these websites even advertise in the local languages to attract a larger crowd. These ads usually speak on how easily one can earn quick money, simply by trading the forex market. Quite a lot of these websites or financial blogs are even popular on a global scale.

However, did you know that forex trading is illegal in India, and can even get you in a legal lawsuit against the system? In this article, we will share with you everything that you need to know about the market of forex trading and why is it banned in India. We will also share with you if there are any ways to possibly legally trade in forex.

What is forex trading?

The term ‘Forex’ basically refers to the market of foreign exchange. It generally involves the process of buying and selling fiat currency. On a global scale, the forex trading market is the largest, as well as the most liquid one to exist at any given moment. And taking into consideration the vast financial potential of forex trading, it has become a very popular method of trading amongst investors.

With the help of forex trading, it is definitely possible to accumulate a large amount of wealth and make an impressive monetary gain. When it comes to Forex trading in India, this concept of investment is comparatively new. So, you need to do proper research and analyze all types of forex charts before making any trading in forex.

When it comes to Forex trading in India, this concept of investment is comparatively new. However, in a very short span of time, it has attracted the attention of a big crowd of Indian residents, ever since the discovery of the appealing opportunities that is offered by these kinds of trading and transactions. OctaFX is a Forex and CFD broker which is founded in 2011 and operating through Cyprus and SVG in Cyprus. Before investing  forex trading you must read octafx review online.   But it is due to the unreliable brokers in the market who make false promises of unrealistic results to the investors, merged together with the regular risks of forex trading that the Indian Government had to put a number of restrictions on forex trades.

forex trading hours in ist

Read more: Comparison of Forex Trading and Stock Trading: Which is Best Option

The legality of Forex Trading in India.

So our ultimate question is whether or not Forex trading legal in India. According to the laws laid by the Indian Government, a regular exchange of online currency is prohibited by the authorities. This means that an individual will not be able to exchange whatever amount of currencies they want, at any given time of their choice. However, trading is permitted by authorities in India, and as long as you are using the Indian Rupee or INR as your base currency. Electronic or online trading that is oversea may be subjected to legal charges, but by avoiding using these approaches for trading and by limiting your trading processes as per the norms set by authority, anyone will be able to trade Forex legally in India.

The central figure in India who has the supreme authority when it comes to matters such as the regulation of these types of trades and investments is the Reserve Bank of India or India, and the Securities Exchange Board of India or SEBI. So in order to be legally protected by these authorities, you always need to make use of the Indian Rupee or INR as the base currency. If you arrange your Forex trades in currency pairs such as the INR & US Dollars, Euro & INR, or the INR & UK pounds, your trade will be fully legal and allowed as per the Indian law.

compare usd and Inr

How can I legally trade Forex in India?

By making use of the following ways you will be able to legally trade Forex in India:

Through Forex Brokers

It is indeed true that trading forex in any other country comes with an increased level of flexibility. But unfortunately, in the case of India, you will have to properly think through the whole process beforehand and chalk up a trading strategy in order to make gains.

  1. Whenever you are done reading through the legal implications and going to step in the Forex trading market, it is always a wise decision to invest your savings through a legal and authorized broker. However, you will need to carry out a thorough research in the background of the broker in order to make sure that he is not a fraud.
  2. Make sure that the broker is registered under the Securities Exchange Board of India or SEBI authorization, without whichever trading activities they carry out for you, it will be done illegally. There are many Indian forex brokers willing to work for you in the Forex trading market, and a majority of them will be offering you INR currency pairing options that go along with the JPY, GBP, UDS, or EUR option.

forex reserves

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Through social trading

A Forex trading trend that has recently emerged, but has already taken the global Forex market by a storm is the Social Forex trading technique. Through the help of this approach, the investor will be able to copy the trades from various other network users. This will increase the likelihood of making investments that are going to be successful.

This method is especially beneficial for beginners who are just stepping into this trade industry and do not have much of an idea as to what forex trading direction will be the most successful and safe to pursue. The beginners will basically benefit from the expertise and knowledge of other expert investors who have an extensive background in the Forex trading market, giving them a great advantage.

Read more: How Can We Become a Professional Forex Trader in 2021

However, if we take into consideration the restrictions in India when it comes to forex trading, in spite of the attractive nature of this method of copy trading, this option is even more difficult to pursue when compared to other regular trading options. Only a small number of brokers in social trading will allow you to take a part in copy trading in India.

So before you take any kind of final decision, make sure that you have compared between all the available platforms, and verified that the platform you are relying on is fully authorized.

currency composition on forex reserve

Final Word

As long as you have taken into consideration all the restrictions there are in forex trading in India, you are definitely free to become a legal forex trader yourself and make your first investment and profits. Just make sure that the broker you are relying on is legally authorized by the Securities Exchange Board of India or SEBI, and that you solely use the Indian rupee or INR, or only the currency that you are allowed to as your base currency. We hope that you found this article to be helpful!