Are Forex Trading Platforms Not Legal in India?

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The foreign exchange market is the largest market in the world and is meant for exchanging foreign currencies. The forex market is composed of currencies from all over the world and like most financial markets is mainly driven by the forces of supply and demand.

Trading, as we know, allows traders to trade on commodities, equity and other financial instruments to make profits. Forex trading is nothing but currency trading. The volume of currency converted every day tends to make price movements of certain currencies very volatile and this volatility makes forex an attractive proposition for traders. Greater the volatility, the greater the chance of making profits. However, there is an increase in the risk percentage as well. There are certain foreign exchange trading platforms on which foreign exchange trading takes place.

Forex Trading Platform – Is it illegal in India?

In India, forex trading is regulated by the capital markets regulator, which is the SEBI. It ensures that the firms follow the Foreign Exchange Management Act, 1999. The Reserve Bank of India regulates forex transactions.

No middleman is involved in this kind of trading. If there’s a rise in a certain currency against the domestic one, then one earns an amount that was previously decided upon. If there’s a drop in the currency, one loses the amount that had been bet.

Foreign exchange platforms are banned in India. Even though direct trading in the foreign exchange market cannot happen, currency trading is permitted through the stock exchange. However, it does come with some restrictions. For example, the base currency has to be the Indian Rupee (INR) and the pairs that are allowed are the US dollar, Japanese Yen, British pound, and Euro.

Indian Forex Trading

If you wish to trade in forex in India, you have to get in touch with a broker that is spread internationally as the markets operate across locations like the U.S., London, Singapore and Tokyo.

Other than that, you need to open a currency trading account. There is a procedure that needs to be followed in order to proceed with that.

  • Firstly, you need to open a trading account with a broker that has a proven track record of being one of the best in the market for trading.
  • The KYC process has to be completed to activate the account. For this, you may have to submit some specific documents and information regarding yourself.
  • There’s a certain amount of margin required for you to start trading . Your broker will inform you about the same after which you can deposit the amount and start trading.
  • Lastly, you would require the necessary access credentials which will be provided by your broker.

Few tips for Forex Trading

To ease your forex trading, here are a few tips listed which will enable you to make informed decisions and wise choices while investing with foreign exchange.

  • Have thorough knowledge of the markets:

    We cannot stress enough the importance of educating yourself on the forex market. It’s imperative that you take time to study the currency pairs and understand what affects them before you risk your capital.
  • Identify your investment goals:

    Your investment goals should always be in sight. It could be anything from long-term to short-term goals. Depending on the timeframe you have assigned to yourself for meeting these goals, you can identify the best strategy that will be in sync with your investment goals so that your goals are met.
  • Be aware of your limits:

    Other than having a strategy, to gain success in forex trading, you need to mark out your own limits. It is very critical for your trading prospects. This includes things like how much you are willing to risk on each trade, identifying in advance the point from which you’ll withdraw from trade, and not risking more than you can afford to lose.

Different people have different approaches to forex trading. Knowing the market and keeping a tab on the current affairs around the world help in a big way to gain success in a volatile market like forex. Hence, it is important to ensure you are well-equipped before you decide to start forex trading.

Investments in securities market are subject to market risk, read all the related documents carefully before investing

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FAQs

Can I open multiple demat accounts?

Answer Field

Yes, you can open multiple demat accounts but only under the below conditions:

  • You can open only one demat account per DP using the same PAN card.
  • You can open multiple demat accounts with different DPs using the same PAN card.

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