Trading is frequently promoted as an investing strategy since it allows the trader to earn returns methodically. Trading can take place on a variety of commodities as well as assets such as equity or stock.

Currency is another commodity that is widely traded all over the world.

Currency trading, often known as foreign exchange (Forex) trading, occurs on foreign exchange markets. Forex trading is typically done through a foreign exchange trading platform, where an individual trader wagers on whether a specific currency will grow or fall versus the local currency.

Because there is no third party involved in this transaction, which takes place entirely between the trader and the platform, such trades are known as binary transactions. If a trader predicts that a given currency will rise against the home currency, and it happens, they will receive a predetermined sum. If the currency truly falls in value, the trader loses the amount they wagered.

Is Forex Trading Legal in India?

It is a well-established fact that no Indian citizen, as directed by SEBI and supervised by the RBI in order to limit risk, can engage in forex trading using any electronic or platforms for online forex trading in India under any circumstances. The RBI issued a circular in 2013 prohibiting forex trading using electronic or online trading venues.

On the other hand, Forex trading is considered lawful when done through specific foreign exchange trading platforms when the base currency is INR (Indian Rupees). Simply put, the Indian government has restricted trading for Indian residents to those currency pairs that are benchmarked against the Indian rupee (Indian Rupee).

In India, forex trading is taxable; however, after the implementation of the Goods and Services Tax (GST) in July 2017, the tax structure has changed from previous years. Fortunately, it has improved because the GST payable is now between 0.058 percent and 0.18 percent of the taxable portion of the Forex transaction, according to reports. The only type of tax that applies to Forex trading in India is GST; however, the taxable amount can be further classified into one of three categories or thresholds.

As an Indian resident, as long as you trade through any specified Indian Brokerage that allows access to Indian Exchanges such as the NSE, BSE, MCX-SX and gives access to currency derivatives, the transactions performed for the trade are totally legal. Previously, the only trading currencies were EURINR, GBPINR, JPYINR, and USDINR. However, beginning on December 10, 2015, the Reserve Bank of India permitted exchanges to provide cross-currency future contracts and exchange-traded currency options in three additional currency pairs: EUR-USD, GBP-USD, and USD-JPY.

How to Trade Currency in India

The FX market is one of the most liquid markets globally, with a volume of $6.6 trillion. It is, nevertheless, equally volatile and bears a high risk of exposure. As a result, forex trading may not be suitable for everyone, particularly novices. The Indian government imposes several regulations on currency trading to shield traders against adverse market movement. As an example,

  1. Traders can only open trades in currency pairs involving Indian rupees.
  2. Clients may only trade with exchange-regulated brokers.
  3. Traders are only permitted to trade currency derivatives.

Forex Trading In India – Online

Currency trading is a very volatile business. The arrival of online forex trading in India has made it even more so. FOREX traders are now armed with very sophisticated software that allows them to trade within seconds after identifying a trading opportunity. It can be challenging for a rookie trader to get the swing of things at first. So, if you intend to trade in the currency market, here are a few pointers to get you started.

  • Don’t try to trade in every currency pair accessible. To establish a trading strategy, focus on one or two currencies, such as the US dollar or the British pound.
  • Recognise the trading style. Because the FOREX market behaves differently than others, you will need to develop a sense of trading in the currency market.
  • Know your limits — carefully arrange your entry and leave. Because no trade is a sure thing, you must carefully assess your risk tolerance before engaging in trading. A comprehensive understanding of the market will assist you in setting reasonable expectations and limiting your losses.
  • Successful currency trading is all about trading with common sense, effective risk management, and keeping your eye on the prize.

Other Forex Trading Methods

There are multiple choices for Forex Investment, India, which are said to offer competitive spreads, research and analysis tools, educational materials, and a variety of investment options and products. Many of the best brokers provide access to MetaTrader 4 and 5, which are well-known for their comprehensive charting tools and technical indicators. They also feature beginner-friendly guides for new traders as well as a variety of educational and training films.

Some Tips for Forex Trading

Every trader should be familiar with two techniques:

  1. Discover how to utilise trailing stops and stop and limit orders to maximise profits on previously profitable transactions while minimising losses. All of these strategies, and many more, are covered in the recommended books. It is common for novice traders to focus on how to win rather than how to minimise their losses.
  2. Traders have a higher chance of benefitting from their investments when they perform a large number of tiny transactions in numerous markets with minimal market linkage. Investing all of your money in a single transaction is never a wise idea.

[ Don’t forget to read: How to Make Profits in Forex Trading? ]

Conclusion

risky reputation, Forex is an excellent place to begin if you’ve never traded before. Currency pairs are less volatile than equities when leverage is not used. When passive investing returns in the FX market are low, it is difficult to mistake a bull market for a financial genius. If you succeed in the currency market, you will succeed in business in general.

With operations in Mauritius, Dubai, and India, GoDoFX provides trading services in financial instruments to institutional clients. If you are a newbie or an experienced trader, you may turn to this beneficial firm for advice, guidance, and much more in order to make money in Forex trading in India.

Don’t forget to read:

  1. Best Broker For Forex Trading In India
  2. Best Gold Trading Company in India
  3. US Stock Trading in India
  4. Forex Day Trading Strategies