Forex trading in India is legally operating under the financial guidelines of RBI and SEBI. To start trading in India, there are certain rules that traders must follow. Therefore, in this article we will break down the important aspects of forex trading and a step-by-step guide to starting forex trading in India.
What is Forex Trading?
Forex trading is the global buying and selling of currencies to profit from their changing values. It involves predicting currency price movements and participating in the vast and liquid foreign exchange market. Traders aim to capitalize on currency fluctuations and make informed decisions to achieve financial gains. The market operates 24 hours a day, providing ample opportunities for trading.
How to Start Forex Trading in India
To start forex trading in India, follow the step-by-step guide given below:
Step 1: Find a Broker
Choosing a reliable broker is the first and crucial step in starting your forex trading journey in India. Numerous options are available but opt for a broker regulated and approved by RBI or SEBI to ensure legality and security in your transactions. Capitalix is a highly recommended broker for trading in India, known for its reliability, authorisation, and authenticity.
Step 2: Sign Up
Once you’ve identified a reputable broker, the next step is to sign up and create an account on their forex platform. This process involves providing the necessary information, such as personal and financial information. Ensure that the information you provide is accurate and up to date.
Step 3: Add Funds
Log into your account and add funds after successfully registering with the chosen broker. The amount you deposit should meet, at the very least, the minimum deposit requirement specified by the broker. This step is essential to ensure you have the capital to start trading.
Step 4: Start Trading
With your account funded, you can embark on your forex trading journey. Most brokers offer both demo and live trading accounts. If you’re new to forex trading, practising with a demo account is highly recommended. This allows you to familiarize yourself with the platform, test trading strategies, and gain confidence before venturing into live trading.
Currency Pairs Offered in India
Currency trading, or forex trading, involves buying and selling currency pairs to speculate and earn profits. The forex market is massive, recording a daily turnover of $2 trillion. The key differentiator is liquidity, allowing simultaneous currency exchanges, known as ‘Speculative forex trading. There are only 7 currency pairs traded in India, which are as follows:
- USD/INR
- EUR/INR
- JPY/INR
- GBP/INR
- EUR/USD
- GBP/USD
- USD/JPY
Currency Pairs Traded in India: Exchange Rates
Euro (Europe): 1 Euro = 89.85 INR (-0.03, -0.03%), for Euro currency exchange, TradeEU is a great broker in India.
Yen (Japan): 1 Yen = 0.57 INR (0.01, 1.45%)
Pound (United Kingdom): 1 Pound = 104.79 INR (-0.12, -0.11%)
Dollar (United States): 1 Dollar = 83.35 INR (0.02, 0.02%)
Best Time to Trade Forex in India
While forex trading in India is 24/5, the best times are during active market hours. The European and North American sessions overlap is particularly favorable, providing tight spreads and high volume.
Global Forex Exchange Timings (Indian Standard Time – IST):
European Session: 1:30 PM to 10:30 PM
North American Session: 7:30 PM to 4:30 AM
These sessions focus on the most traded currency pairs, enhancing trading opportunities.
Pros of Trading in India
Easy and Convenient: Executing trades through online portals is prompt and convenient, saving time compared to traditional methods.
Good Returns: With strategic and intelligent trading, individuals can earn substantial returns, ranging from 18-30% annually.
Don’t Require Capital: Derivatives, tied to underlying assets, offer a way to create profits without needing significant upfront capital.
Liquidity: Indian markets offer liquidity, reducing risk and providing ample opportunities to buy or sell at desired prices.
Price Discovery: Trading facilitates price discovery, determining the appropriate prices based on market dynamics, demand, and other factors.
Cons of Trading in India
Easy Losses: While trading seems lucrative, it’s also easy to incur losses, and many individuals lose money in the markets.
High Tax Liability: Trading activities may lead to high tax liabilities triggered by profits on asset sales and other taxable transactions.
Circuits: Circuit breakers are in place to control market volatility, but they can lead to trading halts in specific situations, impacting market stability.
Conclusion
To sum it up, stepping into the world of forex trading in India means carefully following the rules set by RBI and SEBI. Pick a trusted broker like Equiity for secure trading. The step-by-step guide, from choosing a broker to live trading, lays the groundwork for a successful trading journey.
With only seven currency pairs in India, understanding their exchange rates is crucial. Lastly, trading during active market hours, especially during overlapping sessions, boosts the chance of making profitable trades. Successful forex trading needs knowledge, strategy, and sticking to the rules.