While currency trading can help you generate lucrative returns, it is also a high risk investment opportunity. Things get even more difficult when you trade in a country like India. Besides strict regulatory restrictions, Indian traders have limited options for trading.
Confusion regarding the legality of forex trading in India sometimes also becomes a barrier to entry for many potential traders.
This coin is intended to serve as a beginner’s trading guide.
How to trade forex in India? – A step by step guide for beginners
With a volume of $ 6.6 trillion, the forex market is one of the most liquid markets in the world. However, it is just as volatile and involves excessive exposure to risk. Therefore, forex trading may not be suitable for everyone, especially beginners. To protect traders from adverse market movements, the Indian government enforces various restrictions on currency trading. For example
?? Investors can only open positions in pairs involving Indian Rupees.
Traders can only trade currency derivatives.
â¦ Clients can only trade with brokers regulated by exchanges.
Not to mention that you can also trade three cross currency pairs including GBPUSD, EURUSD, and USDJPY in India.
Here are some steps to help you know where and how to start;
Step 1: Open an account with a regulated stock broker
Traders must register with a regulated broker. The Securities and Exchange Board of India (SEBI) regulates stock exchanges and brokers dealing in foreign exchange trading. Therefore, make sure your potential broker holds SEBI regulations before signing up.
Step 2: verify your account
Traders must complete the KYC process to verify their accounts. Customers can submit the following documents to confirm their identity.
I. National identity card / passport / copy of driving license
II. Bank statement / utility bill
Step 3: Deposit funds to your account
To start trading currencies, you need a funded account. Usually brokers offer several payment methods. Check the options available with your potential broker and select the one that’s right for you.
Step 4: Access the trading platform
Traders need a trading platform to connect to the forex market. MetaTrader4 and MetaTrader5 are the most popular trading platforms in the industry. However, brokers also offer their own bespoke proprietary trading platforms. You have the choice of accessing an online trading platform or using it on a desktop computer. Customers can also install a trading platform on their mobile phones.
Step 5: start placing trades
Once you are done with all the prerequisites, you are ready to start trading. Log into your trading platform using your live account credentials. After logging into a trading platform, find the authorized trading pairs on the market watch and start placing trades.
Important things to remember
Opening a forex account with an unregulated broker is an unreliable criminal offense in India. In addition to being charged with heavy financial penalties, you could face jail time.
Despite strict regulations, forex trading is becoming more and more popular in India. Following the implementation of the FEMA Act of 1999, the central government of India appears to be making efforts to further ease restrictions on foreign exchange trading in India.