What Is Forex Trading In India | Is Forex legal in India

Is Forex Legal in India or Is Forex trading illegal in India? Can Indians trade Forex Legally?

is forex legal

Forex trading is allowed in all countries where individuals and legal entities are allowed to have currency (currency accounts, currency purchases at bank exchange offices, etc.) Do not forget that the Forex participants do not play any games on it

We are getting many requests from our followers from India asking if Forex trading is allowed in India? So, I wanted to take this opportunity to share my findings with our followers since I am from India too. So, Forex trading in India is allowed as long as you trade with registered local brokers with the state acknowledged trading pairs. However, international retail Forex Trading in India is illegal.


  • What is Forex Trading ?
  • How do i start Trading In forex ?
  • How Much Forex Trading Is Profitable in India?
  • Why Forex Trading Is illegal in india?
  • What is best time to trade in Forex in india?

What is forex trading in India 
The word Forex trading is made of 2 different word forex +trading where Forex or FX refer Forex, also known as foreign exchange, FX or currency trading, is a decentralized global market where all the world's currencies trade. The forex market is the largest,
most liquid market in the world with an average daily trading volume exceeding $5 trillion,You can trade between two different pairs of currency like EUR VS USD Or USD VS GBP 
pic What is forex trading in India

How do i start Trading In forex ?

Step 1:  Choose best Forex Broker Like
Our top 5 picks for the best forex brokers in 2019

  • IG is the Best Forex broker. Low fees and a great platform.
  • XTB - A lot of currency pairs and the best CFD broker.
  • FXCM rounded out the top three. It has great charting tools.
  • Pepperstone has low fees and the best customer service.
  • Oanda has the best API.
  •  Exness, FXCM,

You need to open an account with any of above broker in order to start trading. the application process is simple and secure and you can apply for an online account at any time by filling in their online application form
Once you’ve successfully completed the verification process, broker send you an account number by email to confirm that your account is open
Shortly after that, our account managers will give you a call, in case you have any additional questions

Step 2: Fund your account
Once your account is open, you’ll need to transfer funds into it to start trading. You can do this in a variety of ways via the 'Account' tab in the trading platform

You can deposit through

Your initial deposit must be at least $100 but the minimum amount after that is $25
For more information on how you can transfer funds in and out of your account, see our help and support section

Step 3: Start trading
Now you have an online trading account and have deposited funds, you can start trading
Log in, choose whether to trade Forex through spread betting, CFDs or spot FX, pick your pairs and open a position
You can access live price feeds, streaming charts and news instantly and trade 24-hours a day
They offer a range of powerful trading platforms including AT Pro (downloadable) and Advantage Web (browser-based)
For more details of the markets available for you to trade, click on the online Market Information icon in the trading platform
Watch the platform video to see how to place your first trade

When ever we speak on forex trading in India , the RBI regulations limit the trader's options. ... When the global Forex trading is dominated by the USD, occupying more than 87% of the net trade practices, Forex trading is not much profitable for Indian investors,Your trading approach is much more than a trading strategy and we will cover that later. The short answer is yes, Forex trading is profitable. The slightly longer answer is yes, trading in the Forex market is profitable but chances are you won't make any money,So before start trading in forex Contact your Finincial Advisiour .


Trading on other pairs Except INR is illegal under FEMA Act. Trading in forex market through online broker is a Non-Bailable Offence in India. ... Its perfectly legal to trade anything with Indian Exchanges(NSE, BSE, MCX-SX) offering Forex Instruments Currently USDINR, GBPINR, JPYINR, EURINR)Forex trading is legal in many countries, But its illegal in India. Its a profitable business but very risky. Before you start trading, education is a must or you stand the risk of losing your funds. Besides, a lot of brokers operate illegally without been regulated so beware before take any action regarding investing .

As You all know forex trading is 24 hr trade business , But as per my expreinces the best time to trade in forex in india is 6 pm to 9m , But Lots of trade trade between Best time for me to trade the forex market in India is from Afternoon to Midnight. You can make a lot of good profits in that period of time during the london and NY session, Only if you know how to trade this forex market and can predict well with your analysis, 


First a clarification – Foreign Exchange trading or Forex trading in India is illegal. It may sound a little surprising and strange that why should there be an article about what is not allowed?

Let me explain- there are lot of offshore online portals (based in countries that are considered to be tax havens and are outside the purview of Indian legal framework) that allow an individual to trade online in foreign currency with a small margin; however that is not allowed by the RBI.
These portals advertise aggressively and try to lure customers with promise of high returns by making a small investment but remember apart from being illegal these dealings can be fraught with operational risks.

What RBI allows and is generally understood as Forex trading in India is trading in currency derivatives. As per RBI rules “a person resident in India may enter into currency futures or currency options on a stock exchange recognized under section 4 of the Securities Contract (Regulation) Act, 1956, to hedge an exposure to risk or otherwise, subject to such terms and conditions as may be set forth in the directions issued by the RBI from time to time”.

Forex Trading in India – Rules and Procedures

So now that we understand that trading in only forex derivatives is permitted by the Indian law let us get an overview about the rules and procedures that govern this trade in India. The framework for trading in derivatives has been set up by the RBI and SEBI while the legal guidelines are provided by FEMA (Foreign Exchange Management Act) provides the legal guideline for

Trading in currency derivatives on recognized exchanges has been permitted by RBI and SEBI since 2008.

Currently you can trade in three stock exchanges; these are the National Stock Exchange (NSE), MCX-SX and the United Stock Exchange (USE).
Initially only futures for the INR/Dollar pair were allowed; later more pairs were introduced. At present you can trade in derivatives of Dollars, GBP, Euro and Japanese Yen; you can also trade in Dollars and Interest Rate Futures on 10 Y GS 7 and 91 D T-Bill.
Currency options are also available with underlying as US Dollar /Indian Rupee (USD-INR) spot rate.
Derivatives are traded on margin; you are required to deposit an initial margin with the exchange through your financial intermediary.
Contracts are always settled in cash and in Indian Rupee; settlement is guaranteed by the exchange.
The futures have a cycle range from 1 month to 12 months; for options it is three months.
The lot size for futures is 1000 per unit except for the JPY/INR pair where the lot size is 100000 units.

Requirements for Forex Trading in Currency Futures
Forex trading in all derivatives is online and requires completion of certain formalities before you can start trading in them. Almost all leading banks and many other financial institutions provide you with a platform for currency trading.

Investors interested in trading in currency derivatives are required to open a trading account for currency derivatives.

Some banks allow you to use a common trading account for equity and currency derivatives while some may require that you open a separate trading account for forex derivatives. Unlike equity no demat account is required for trading in derivatives.
As per the guidelines laid by SEBI and RBI the customer is expected to complete the KYC (Know Your Customer) guidelines and submit the required documents. These guidelines are pretty standard and are usually uniform across all banks.
These accounts are essentially online and are linked to your savings or current account to facilitate settlement of trades. You would be provided with your login id and password so that you can log on to the portal and start trading.
It is recommended that you familiarize yourself with all the terms, tools and procedures before you begin trade. Being aware of the operational guidelines for the portal is important.
Choosing a good institution for opening an account ensures that you get safety in transactions and accurate and timely information. Always take a demo for the site.

Other aspects that govern choosing which bank to open an account with are: brokerage rates; products offered and which exchange does the bank have tie-up with.

Before you start trading you are required to have the requisite amount in your linked savings account as margin; the margin is generally 5% of the contract value. In a few instances the bank may change this depending on market volatility.


Forex trading is normally done on the margin trading principles. That means you can trade for a bigger amount with a relatively smaller deposit.Trading in markets requires you to stay alert and updated; always keep abreast about the change in guidelines or other relevant information.

Most reputed and established intermediaries provide a lot of information to the client be it in the form of emails, tickers on the site, mobile alerts and so on.

However as a customer it is you job to go through the information provided and use it your advantage. Currency derivatives help you to diversify your portfolio and for those dealing in foreign exchange they can be an effective tool for hedging.

In Forex trading you are always offered a quote of spread. That means you are offered by your broker a buying price and selling price for a specific currency pair. If you accept that spread the trade is executed by the broker and you need not go to the exchange trading floor for the trading.


What is the punishment for doing Forex trading in India? There is no punishment unless you are breaking FEMA law in drastic manner. In short, you can not be punished because RBI doesn't govern individuals directly, rather it governs banks

Why Is Forex Trading Illegal in Some Countries?

Forex Financial Currency Exchange is the largest and most far-reaching market in the world, which gives many traders a chance to start a successful business and make money with the currency trading. Currency trading, like any other activity, is surrounded by numerous misconceptions and myths. They can affect every trader, no matter how long he trades.
So, many people refuse to trade on Forex, as they believe that this financial market is prohibited in their country or around the world, as it’s gambling or something like that. But it is not so!
Forex trading is allowed in all countries where individuals and legal entities are allowed to have currency (currency accounts, currency purchases at bank exchange offices, etc.) Do not forget that the Forex participants do not play any games on it. Most Forex participants use Forex for import and export operations, for international investments, for making money on changing currency prices and for other serious purposes

Forex Market Regulation

Moreover, self-respecting Forex brokers, through which people trade on the market, should receive a special license confirming that they are regulated by higher authorities. So, the activity of any financial intermediaries, which include forex brokers and dealing centres, is subject to mandatory certification.

For example, the CySEC (Securities and Exchange Commission) Forex regulator, located in Cyprus, has the necessary minimum level to protect the client. Offshore companies use its services.
Regulators in the US:
  • SEC – securities;
  • CTFC – currency market regulation;
  • NFA – non-governmental futures association;
  • FINKA – independent regulator of financial markets;
  • SIPC – protection of investors.
The regulator of Switzerland is FINMA – supervision of the financial markets. The UK regulator is FCA – financial services control. In Australia, the Forex market is regulated by ASIC (Commission on Investments and Securities). Financial regulation in Belize is undertaken by the International Financial Services Commission, for instance, JustForex broker has the IFSC license.
European regulators:
  • ESMA – an independent regulator of the European Union;
  • MIFD – an EU directive to service a majority of representatives of the European market.

Forex in the USA

One of the common myths among nonprofessional traders of the Forex market is that Forex is banned in the United States of America. This is not true. In the US, Forex is not prohibited! But in the American market, the work of brokers is very tightly and carefully monitored.
In order to provide Forex trading services, the broker must obtain the appropriate license and must have a security deposit in the amount of about $20 million. Therefore, many brokerage companies from other countries, complying the requirements of US law, give warnings on their websites that their services are not intended for US citizens. It is because only a small group of regulated companies serves North American customers. But American laws do not prohibit citizens of this country to trade on the Forex market

Forex and Islam

A lot of people also believe that Forex is banned in countries where Islam is practiced. However, this is not quite true.
Sharia Islamic Law, namely the law of Islam, prohibits giving or receiving interests in any form. The reason for this prohibition lies in the conviction that the adherents of Islam should give only to give, and not to get something back. Therefore, according to these beliefs, not the Forex trading itself is prohibited, but a swap.
A swap is a daily charge or withdrawal from the deposit of a trader of money for the transfer of a position on open trades over the night.
But in such a case, swap-free accounts or Islamic accounts with no swap were created. All commissions in the form of interest are absent in Islamic accounts. Thus, Sharia law is not violated, and Forex becomes accessible to all.
So, the Forex trading is not banned in the world. Moreover, every day more and more traders come here who successfully trade and earn money. If you’re looking for a good broker, take a look at JustForex – international broker offering good trading conditions and reliable process of depositing and withdrawal of funds.


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