India is a land of diverse cultures and a growing economy. Foreign exchange (forex) trading in India is an emerging platform with exciting opportunities.
Be part of action and learn to trade forex with our guide to forex in India.
Get Started with Forex in India
Forex trading is not entirely legal in India. You are only allowed to trade currency pairs that include the Indian Rupee (INR). The primary reason behind this restriction is that the INR is weak against the U.S. dollar (USD). Traders from India who want to buy the USD have to purchase it from the Central Bank of India.
As a citizen of India, you can trade forex on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Metropolitan Stock Exchange (MSE). Established in 1992, the Securities and Exchange Board of India (SEBI) was set up to monitor and regulate forex activity in India. It is an autonomous authority that protects forex securities issuers, investors and forex-related agencies. Forex brokers and stock exchanges must be licensed by SEBI to operate within India.
Ready to get serious about trading forex in India? Here’s a step-by-step guide to help you get started.
Step 1: Get a Digital Device with Fast Internet Connectivity
You can use your desktop, laptop, tablet or smartphone to trade forex. The value of the currency pairs listed on the stock exchanges frequently fluctuates. A personal device to constantly track these changes is essential to successful forex trading.
Step 2: Find an Online Forex Broker
There are several forex brokers available online. Go through each broker’s website and choose 1 that allows you to trade INR currency pairs.
Be sure to check the footer of every website for information on the regulatory bodies. If you can’t find any such information from the Securities Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) or similar regulatory bodies, the broker can’t be trusted.
- securely through eToro Forex's websiteBest For:Demo Accounts
CFD trading is not available to U.S. users. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
- securely through Forex.com NON US's websiteBest For:Forex Trading in and Outside the U.S.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Step 3: Sign-up for an Account
You can open a new account with the forex broker on its website. Some forex brokers require a minimum amount of deposit to open an account. These brokers also offer different kinds of accounts based on your financial goals. Choose the 1 that’s right for you.
Step 4: Transfer Funds to Your Account
Once you’ve signed up for an account, you need to transfer funds to start trading forex. Depending on the broker you’ve chosen, you can choose your native currency and fund your account using several options. Generally, these funding options include bank transfers, wire transfers and debit cards.
Step 5: Download a Forex Trading Platform
You need to download the forex trading platform on your computer or smartphone. Take the time to customize the look and feel of the platform to help you maximize forex trading opportunities.
Step 6: Begin Your Forex Trading Journey.
Before you start trading forex, you might want to run a few demos using virtual money. These demos can help you get used to the interface of the forex broker without conceding unnecessary losses. After you feel confident using the platform, you can start trading forex using real money.
India Forex Trading Strategies
Forex traders rely on certain basic strategies to make a profit on international markets. These forex trading strategies are easy to learn but difficult to master. Take a look at some of the major forex trading strategies.
Scalping is a forex trading strategy that involves making small profits with multiple trades. You can set the entry and exit positions with minor changes in the currencies to achieve low margins. Scalping needs precise execution to make the most of your trades.
These are short-term trades that can last anywhere between 1 to 60 minutes. Being well-informed about currency trends is crucial to successful scalping.
As the name suggests, day trading involves opening and closing a trade on the same day. These trades can take place anywhere between a few minutes to a couple of hours. This way you can avoid running through unprecedented losses due to overnight price volatility.
If you’re new to forex trading, day trading is a simple and straightforward method to start earning. It can limit your risk while improving your chances of profitability.
Swing trading is a strategy that involves trading forex currencies over a day or a week. This method gives you plenty of time to deflect daily ups and downs in the value of currency pairs. You can skip through needless stop losses along the way with this medium-term forex trading strategy.
Position trading is a strategy that involves holding your trade positions open for the long term. These trades can take place anywhere between a week to several months or even years. This method lets you take advantage of major shifts in the value of currency pairs without stressing over micro changes in the market.
You can set the entry and exit positions for lengthier durations with position trading. Keeping a watchful eye over current events and socio-economic policies that affect the world at large is key to making this type of trading work. You can casually sign-in to your account once or twice a week.
Range trading is a strategy that involves predictable price movements of currency pairs. This method relies on historical performance data of currency pairs to identify repeating patterns of lows and highs.
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.
Forex Trading Example in India
Let’s say the USD/INR is trading at 74.6350. If you’re expecting the value of USD to rise in a few hours, you can buy 100,000 units of USD. In this case, you’ll need 7,463,500 INR deposited in your account to complete the transaction.
In 3 hours, the value of the U.S. dollar against the Indian Rupee rises to 75.0000. You can immediately sell the $100,000 you bought and make a profit of 36,500 INR (7,500,000 - 7,463,500) within a single day.
Making Money with Forex in India
The biggest hurdle you’ll face when trading Indian forex is the limited number of foreign currencies. Indian residents can only trade forex pairs with the INR in it. But the USD/INR is a popular currency pair with an attractive return rate.
Historically, the USD has been proven to grow stronger in value over the years. Considering the recent performance, the 52-week low for the USD is 68.2900 while the 52-week high is 76.9163. You can leverage the broad range of price movements to make tremendous profits in the short and long-term.
Millions of people trade forex every day. For successful forex trading, learn these basic terms before you get started.
Pip: the smallest unit of price movement in a currency pair. Forex pairs are usually listed to the 4th decimal point. For instance, if the USD/INR has moved from 74.6535 to 74.6545, it is considered a rise of 10 pips.
Lot size: the total number of currency units bought or sold. 100,000 units is the standard lot size but you can trade lesser units as well.
Orders: an order lets you execute the trade. For instance, if you want to buy 100 USD/INR, you execute a buy order. Similarly, if you want to sell 100 USD/INR, you execute a sell order. There are different types of orders to help you minimize losses and maximize profits.
Calls: a call is sent out by your online broker when your trade positions need additional funding to be maintained. You should constantly check your account for any calls you may have received to avoid further losses.
Things to Consider Before Trading Forex in India
Here are some key points to consider when it comes to forex India:
- Currency Pairs: Forex trading involves the trading of currency pairs. The most commonly traded currency pairs include major currencies such as the US dollar (USD), Euro (EUR), British pound (GBP), Japanese yen (JPY), etc. Traders speculate on the direction of exchange rates between these currency pairs.
- Forex Trading Platforms: Forex trading can be conducted through various online platforms provided by authorized brokers. These platforms offer traders access to real-time market prices, charts, technical analysis tools, and the ability to execute trades.
- Regulations and Legalities: Forex trading in India is regulated by the RBI and SEBI. Residents of India are only allowed to trade forex through authorized brokers who adhere to the regulatory guidelines. It is essential to choose a reliable and licensed broker to ensure the safety of your funds and compliance with the regulations.
- Account Types: Forex brokers offer different types of trading accounts, including demo accounts for practice purposes and live accounts for real trading. A live trading account requires a minimum deposit, and traders can choose from various account types based on their trading preferences and capital.
- Risk Management: Forex trading involves inherent risks, including the potential for financial loss. Traders should have a sound understanding of risk management techniques, such as setting stop-loss orders, using proper position sizing, and diversifying their trading portfolio.
- Education and Analysis: Successful forex trading requires knowledge and skills. Traders should invest time in learning about fundamental and technical analysis, market trends, and economic indicators that can impact currency movements. Utilizing educational resources, attending webinars, and staying updated with market news are important aspects of becoming a proficient forex trader.
- Practice and Strategy: Before committing real money, it is advisable to practice forex trading using demo accounts. This allows traders to familiarize themselves with the platform, test different strategies, and gain practical experience without risking their capital.
Forex Trading in India at a Glance
If you are planning to start trading forex in India, then you must have a clear understanding of the process and the risks involved. Forex trading is the buying and selling of currencies with the aim of making a profit from the fluctuations in their value. In India, forex trading is regulated by the Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI).
To start trading forex in India, you need to follow a few steps. Firstly, you need to select a reliable forex broker who can offer you a trading platform that suits your trading style, and meets your risk management needs. Secondly, you need to make sure you have a good understanding of the market and the currencies you wish to trade. Use reputable sources such as financial news and analysis outlets to stay informed about market trends and expected movements in currency prices.
Lastly, you should start with a demo account to practice trading before investing real money. This will enable you to familiarize yourself with the platform, test out your trading strategy, and gain the confidence to trade successfully. Remember, the forex market is highly volatile, and losses can be significant. Therefore, it is essential to have proper risk management techniques in place, such as using stop-loss orders.
Starting forex trading in India is a complex process, but with the proper guidance, strategy, and mindset, you can become a successful forex trader and make a profit from the markets.
Frequently Asked Questions
Who regulates forex trading in India?
The SEBI is responsible for regulating forex, brokers and protecting investors.
What are the best online forex brokers in India?
There are several to include Pepperstone, Forex.com and Etoro.
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